Gen Z’s financial confidence gap in the UK

Many people in the UK are reticent when it comes to their economics, according to research on the subject. According to a study by Pay.UK, 55% of people aged 18 to 24 lack confidence in their ability to manage their finances. This may be one of the reasons that 34% of UK adults currently identify as savers or spenders, according to research by Gatehouse Bank. Many members of Gen Z are beginning to realize they lack appropriate knowledge of financial services as more of them leave the educational system. Seventy-five percent of Gen Z (18 to 24 year olds) said they wish they had received greater financial education in school, according to Pay.UK, the owner and operator of the Current Account Switch Service.

90% of respondents to Pay.UK’s survey admitted they are speaking to someone to help with their financial condition, which may be attributed to a combination of a challenging financial environment—in which the cost of living problem plays a significant role—and a lack of financial experience. The majority (59%) consults family members, 15% consults friends, and 11% contacts a bank or financial advisor.

Fortunately, more than 78% of the 2,000 poll participants stated they felt supported by their banking provider. However, 35% of respondents who were asked what their banking provider could do to help them more said they would gain from receiving free financial assistance. Furthermore, 32% of respondents claimed they needed improved tools for budgeting.

Having a large section of this generation feel supported by their bank is comforting. In an increasingly difficult financial environment, John Dentry, product owner at Pay.UK, advises young people to use the Current Account Switch Service to switch banks quickly, easily, and guaranteed.

Changing financial behavior

In terms of banking, the report also finds differences in financial literacy. 31 percent of respondents claimed they had no idea what a current account was. In actuality, only 35% of Gen Z’ers have made the switch to a current account.

This is supported by Dentry’s comment that “the number of 18 to 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.”

Surviving the cost of living problem and inflation

The cost of living situation is causing concern for 50% of Pay.UK’s respondents. Another quarter (26%) and 23%, respectively, are concerned about the costs of renting and owning a home.

A little over a quarter (27%) claimed to have no debt, while 27% admitted to utilizing their overdraft to cover essentials. When they are waiting for payday, one in five people use BNPL. In the meantime, 10% of takeout and 12% of physical food stores employ BNPL.

However, those who are suffering in this environment are not just the young. A recent study by Gatehouse Bank, a challenger bank that complies with Shariah law, found that 11% of UK people have changed their spending patterns in an effort to save more money.

People are turning to saving as a way to survive in greater and greater numbers. In fact, 44% of savers claimed that they regarded their savings as a necessary expense on par with their mortgage or rent.

A surprise benefit?

There is no way to characterize the cost-of-living issue as a blessing. However, it has increased many people’s awareness of their finances. More over half (59%) of respondents from Gatehouse Bank said they wanted to increase their monthly savings.

“The research shows a promising rise in the percentage of UK adults who classify themselves as savers, demonstrating that people are actively shifting their mindset, which is really positive,” says Ravi Kumar, senior product manager at Gatehouse Bank.

“Continue setting savings goals and contributing some money each month in the current high-rate environment. A healthy savings habit can be developed by starting small and working your way up in the long run.