A new report from Virgin Money reveals that Generation Z might be the most financially-conscious generation yet. Confounding stereotypes, the report details how Gen Z is the generation that cares the most about their financial security (27% 18-24 vs 18% 55+) and worries most about how the current economic climate will impact on their short-term (73%) and long-term goals (70%). Perhaps most surprisingly, 18-24-year-olds have, on average, a lower outstanding balance of £199 on buy now, pay later products than their elders (compared with £224 for Gen X).
The findings come from research commissioned by Virgin Money with 5,000 consumers in the UK across different age groups, as it launches Virgin Money Slyce Link opens in a new window, a new way to buy now, pay better.
Worries about their future feed into Gen Z’s saving behaviours, with the report showing that although many are in the early stages of their careers, 18-24-year-olds on average have an impressive £4,935 in savings, just behind Millennials with £6,053 and Generation X at £6,701.</[>
Disrupting the ‘generation rent’ stereotype, the report also finds more than half of Gen Z (54%) selected owning a home as a key long-term goal, along with saving for their current or future family (44%) and having enough money to retire (42%).
Gen Z are also surprisingly savvy spenders. They are trying to buy things that are responsibly sourced, second hand or more environmentally friendly (43% 18-24 vs 34% 55+), implying they aren’t as into throwaway fast fashion as many assume. They are more likely to purchase high-value, high-quality items, such as designer clothing or jewellery (16% 18-24 vs 7% 55+), limited edition items (16% vs 5%) or original artwork (6% vs 2%), when using their debit card.
More than half of Gen Z (52% vs 46% Gen X) say they try to spend on longer-lasting items and are conscious of the environmental impact of their spending decisions (38% Gen Z vs 34% Millennials and 32% Gen X) – proving that of all generations, they are the most socially conscious with their spending.
Almost seven in 10 Gen Z’ers don’t use credit cards at all, potentially causing a generational credit score slump as young people battle the cost-of-living crisis to build savings. Gen Z are also the least aware of their credit score (29%) and 18% are unclear about how credit cards work. For those who do have a credit card, 20% still do not know the effects that BNPL schemes have on their credit score, compared to just 10% of over 55’s.
To help Gen Z manage their buy now, pay later spending with one easy payment, while building their credit score, Virgin Money has created Slyce, a way to buy now, pay better. Virgin Money Slyce, created in partnership with Mastercard, combines the flexibility of a buy now, pay later product with the benefits of a regulated credit card and allows customers to manage their money in a way that works for them. Slyce is inbuilt with financial content to ensure that consumers can easily manage and be alerted when payments are due – avoiding missed payments altogether – and helps shoppers to build their credit scores.
Jayne Sutherland, Head of Commercial Strategy and Propositions at Virgin Money, says:
“There are too many buy now, pay later products which give young people a headache that won’t go away. We know that Gen Z deserve credit that’s simple, manageable and rewarding, helping to boost their credit score as they battle the cost-of-living crisis to build for the future.
“We think there’s a better way to do buy now, pay later, and that’s why we’ve introduced Slyce – a brilliant and fresh alternative that gives people the flexibility to pay in a way that suits them.”
Mr MoneyJar’s Timi Merriman-Johnson has partnered with Virgin Money to reshape perceptions about younger people’s financial literacy and get more people to buy now, pay better.
Timi said:“Debt and credit card debt in particular, seems to have a lot of shame and misinformation attached to it, with many people opting for what they think is a safer option by buying now, paying later on purchases.
“As a Millennial, I’m aware of the incorrect perceptions of younger generations and our financial understanding. Although most of these perceptions are wrong, the assumption that BNPL is safer or better for our credit scores isn’t really correct. Debt is a great tool when used the right way, not only can it support building your credit score to help secure loans and mortgages, it can also be a better way of managing your finances – particularly when you are purchasing items you already were planning to purchase.
"I’m excited about Virgin Money’s Slyce, the option to split your repayments into six fee-free instalments and ability to bundle all your monthly spend into one place makes managing good debt so much easier and allows you to purchase from whatever vendor you like. Plus, you have the added reassurance of spending with a regulated product, via a responsible lender.”
Virgin Money’s Slyce gives customers the flexibility to buy now, pay better. With savings a key priority for a fifth of Gen Z, the app lets them consolidate their spending into one place, with one hassle-free monthly payment, enabling them to have a clearer picture of savings and spendings.
Any monthly spend over £30 can also be spread across 3-, 6-, 9- or 12-month repayment plans to suit individual budgets and paying back in 3 or 6 months is fee-free. For longer plans of 9 and 12 months, an instalment fee is added. The fee is a percentage of the total amount a customer puts into the plan – 9 monthly payments have a 7.5 per cent fee added, and 12 monthly payments have a 10 per cent payment fee added.
Check here for further information on Virgin Money Slyce Link opens in a new window.
Final acceptance for Slyce is subject to status.