Spend Wisely: Millennials, Gen Zs Became ‘Financially Conscious’ Due To Pandemic — Study
Based on a study, 77% of the respondents said they now prioritize spending on their needs more than their wants while 82% of them shared that they are afraid to incur debts or take loans.
Are you a millennial who has become wary of how you will spend your hard-earned savings? It appears you’re not the only one, as people your age and even those part of Generation Z became more financially conscious due to the COVID-19 pandemic.
In a study conducted by insurance company Manulife Philippines, it found that most people identified as millennials and those from the Generation Z or Gen Z are now wiser when it comes to spending their money as they have become “more aware of the possible consequences of being financially unprepared for the unexpected.”
Millennials or Generation Y, as identified by the study, are those born between 1981 and 1996, while those belonging to Gen Z are those born between 1997 and 2012. A total of 300 millennials and 200 Gen Zs from all over the Philippines participated in the survey.
Survey results also showed that there are several stressors that led the millennials and Gen Zs to be more financially conscious, with the top three being – they are either afraid that they will run out of money, that they will get sick, or they, or a family member, will die.
According to Manulife Philippines senior vice president and chief marketing officer Melissa Henson, some millennials and Gen Zs now also have heightened financial insecurity, which can be attributed to several factors, because of the pandemic.
“Some have taken pay cuts; some have gone from a dual income family to a single income family, and some have also experienced job loss. So I think we're experiencing all of that happening around us,” Henson pointed out.
Because of the uncertainties brought about by the pandemic, Henson said “there's a lot of worry about income loss and job loss that will continue.”
“We don't know when it (pandemic) will end or we will go into full economic recovery,” she added.
Because of this, 77% of the respondents said they now prioritize spending on their needs more than their wants while 82% of them shared that they are afraid to incur debts or take loans.
Only 19% of them save a portion of their earnings to luxuries. And interestingly, Henson noted, 28% of Gen Z save a portion of their earnings to buy K-pop merchandise.
According to Henson, the pandemic has been a “game changer” for both millennials and Gen Zs when it comes to budgeting their money.
“They’re at the point right now where they are going through significant life changes,” Henson disclosed during a virtual briefing on of the study on Wednesday, Aug. 25.
“And these are really our future leaders, future drivers of social economic change for our country,” she stated.
Mental health effects
Aside from this, 53% of respondents from Gen Z said they turn to social media to de-stress themselves due to the lockdowns. But this age group, particularly students, also expressed concern about their mental health.
Based on the study, “toxic social media” was cited as one of the reasons why Gen Zs need to take care of their mental health. Henson said there are “a lot of misinformation, a lot of fake news” on social media and their effects are harmful on young people.
“It’s also a channel where you can be criticized, belittled on a very large scale,” Henson said about social media’s impact on the decline of some of Gen Z’s mental health. “So that causes some anxiety, and it also heightens their fears.”
The study also found that to take care of their mental health, Gen Zs practice various activities like getting enough sleep (84%), enjoying a proper meal (76%), talking to friends and family (74%), making time for hobbies (74%), and being active through fitness activities and exercise (62%).
With both millennials and Gen Zs being more financially conscious, they also now see the importance of growing their money.
Manulife Philippines’ study found that 86% of both millennials and Gen Zs acknowledge the importance of seeing where their money goes, and that 75% of millennials “religiously track their net worth” overtime.
Millennials also hold more types of financial products, with their approach to investment is “more of accepting risk while acknowledging the need for protection,” the study showed.
Seventy-nine percent of millennials have insurance, while 78% are subscribed to government savings programs, 60% are into cryptocurrency, 45% have accident insurance, and 38% have mutual funds.
Meanwhile, 68% of Gen Zs surveyed have gotten an insurance, 50% of them are subscribed to government savings programs, 40% are into cryptocurrency, 38% of them have accidental insurance and 33% have mutual funds.
Both millennials and Gen Zs, the study showed, have decided to pursue financial security earlier – Gen Zs started saving when they were 17 and investing their money at 21, while millennials started saving at 23, and investing at 27.
But what about those who are lacking financial literacy? Henson encouraged them to get educated while they are young.
“There are resources that are available for us to learn about finances, to learn about saving, and our different options. And many who try and help build this kind of awareness,” Henson said.
“My advice to Gen Zs and millennials is that when you see opportunities…that are available to you for you to learn about different ways of saving and investing, take the opportunity to join and listen and learn, because it could make us smarter managers of our personal finances,” she added.