I’m sure you remember your aspirations from early childhood and I wonder how many of us wanted to be astronauts, musicians, pilots or cutting-edge scientists. When our current Generation Z (those born around the turn of the millennium) enter the workplace and give up on the idea of being a prime minister or famous singer, I wonder what practical life skills they’ll have been equipped with? After all, this will be the most ‘connected’ generation we’ve ever seen start their careers. So surely, they will know everything about everything … right!?
The reality is far from ideal, with research showing that the current Generation Z has a general lack of engagement with financial affairs and even worse, has a below average understanding of topics such as saving, investing, pensions and debt management. The general behaviours of our young workers seem tilted towards spending rather than saving and, coupled with their expectations to lead a life of debt as a result of tuition fees and finance agreements for everything in their daily lives, it’s no wonder they are disengaged.
The Pensions Policy Institute paints a difficult picture for our Gen Z employees, with:
- the average debt for graduates at nearly £50,000
- the average house prices running at 8 x average salary
- the average age of first-time buyers now at 33 years old[1]
So, where are our younger generation going to learn about money? Well, it’s heartening to see that the national curriculum is looking to address this, with money and finance now being seen as a life skill worth investing classroom time in, but this will take a while to filter through to the workplace. Sadly, in the meantime, 77% of young people trust financial guidance provided by social media influencers!
It’s important for employers to remember that only a third of new starters and young employees have received any kind of financial education in a school, college or university setting, so the burden is falling on the employer to deliver financial wellbeing. Younger workers need education and guidance to find a happy balance between their short-term, medium-term and long-term financial plans.
If this isn’t addressed, employees will simply be left to learn from their mistakes and this could, in some cases, lead to deeper financial issues later in life. Financial problems have a direct correlation with mental and physical wellbeing, so the need to have good financial skills is an important aspect of educating and mentoring the younger workforce.
I’m often reminded of the Chinese proverb: “The best time to plant a tree was 20 years ago, the second-best time is now”. We really want and need our younger generation to engage with their employee pensions and benefits, so they can make informed decisions and create good outcomes. We really don’t want to see them in the situation where they look back on their career and wish they’d joined sooner, that they’d invested more and ultimately, that they don’t lose out on having a good long-term financial plan for their working lives.
It has never been more important to start teaching our young adults about money, finance and efficient use of their employee benefits. It is NOT all about pensions, but it IS about learning, engaging and taking small positive steps that lead to better long-term outcomes.
Equip your team with essential financial skills and prevent them from learning the hard way. Better yet, we can take the burden off your shoulders. Contact your Mattioli Woods consultant or email us today to discover how our education programmes can support their financial wellbeing.
1 –Pensions Policy Institute | The Concerns of Gen Z
Content correct at time of writing.
