Pay.UK, owner and operator of the Current Account Switch Service, today publishes research revealing that the majority of Gen Z wish they had received more financial education at school.
As many young people return to school and university, new research from Pay.UK, owner and operator of the Current Account Switch Service, today publishes reveals that three quarters (75%) of 18-24 year olds (“Gen Z”) wish they had received more financial education at school.2
The UK-wide survey of over 2,000 18-24 year olds across different lifestyle groups suggests that many young people want to understand more about their finances. Over half of respondents wished they had learned more about savings, budgeting and building credit when they were at school (63%, 62%, 56% respectively). These topics were closely followed by pensions (43%) and current accounts (42%).
Almost all survey respondents (90%) said they were speaking to someone about their financial situation, with the majority turning to family (59%). Many are also turning to their friends (15%) and their bank or a financial adviser (11%) for advice. Despite this, over half (55%) of 18-24 year olds do not feel confident when it comes to managing their finances.
Reassuringly, 78% of respondents feel supported by their banking provider. However, when asked what their banking provider could do to support them more, 35% felt they would benefit from free financial support and 32% from better budgeting tools.
The research also reveals disparities in financial literacy when it comes to banking, with 31% stating they do not know what a current account is.
Current account switching trends
When asked about switching their current account, only a third (35%) of Gen Zs have ever switched, with financial incentives coming out as the main reason for switching (20%). For others, the main reasons for switching include not feeling that their old provider properly served their needs (18%), poor customer service with their old provider (16%), cashback incentives (15%), frustration with their old supplier (12%), and overdraft facilities with their new provider (10%).
When asked to consider up to three benefits that sound most important when thinking about banking, over half (62%) of respondents felt that online banking was the most important. This was followed by fraud and scam protection (40%), customer service (29%), and being able to have all products with one provider (21%).
As young people grapple with rising inflation and economic uncertainty, the research reveals that 70% of Gen Z are more worried about their financial stability than they were this time last year. Half of respondents (50%) are specifically worried about the cost of living crisis, while a quarter (26%) are worried about the cost of buying a house and 23% about the cost of renting.
Meanwhile, over a quarter (27%) of those surveyed are using their overdraft facility to pay for necessities. This is followed by going out with friends (17%), buying new clothing (15%), and travelling abroad (14%).
Only 27% of Gen Z said they do not have any debt, with student loans (36%), credit card debt (16%) and Buy Now Pay Later (“BNPL”) debt (15%) featuring as the most common types of debt for this generation. Only 14% took loans from their family and 9% from their banks.
As online shopping continues to grow in popularity, the research reveals that BNPL plays a role in spending habits for this age group, with just over a third (34%) using BNPL schemes at least once a month. Buying clothes online (32%), large purchases such as electronics (32%), and birthday or Christmas gifts (20%) came in as the most popular BNPL purchases. However, 1 in 5 (20%) are using BNPL when they are waiting for payday while 12% use BNPL for physical food shops and 10% for takeaways.
John Dentry, Product Owner at Pay.UK, commented: “The number of 18-24 year olds who do not know what a current account is surprisingly high and highlights the need for better financial education for Gen Z, not only for current accounts, but banking habits more generally. For those who do not know what a current account is, it’s really important that banks, institutions, and we as a Service are educating young people, so they can take the first step in finding a bank account that best suits their needs.
“Banks and building societies offer a host of products and services that could better serve the needs of young people across the UK. From cash incentives and higher interest rates for the budget conscious student, to better customer service and streamlined apps, which may offer an enhanced user experience.
“It’s reassuring to see that a large majority of this generation feel supported by their banking provider. As young people continue to navigate an increasingly challenging financial environment, they can rest assured that if they find a bank that better suits their needs, the Current Account Switch Service is on hand to facilitate a quick, easy and guaranteed transition to their new account.”