Future Finance: Two Key Consumer Budgeting Trends
Published 15 January 2024
As Gen Zers start earning ‘grown-up salaries’, they’re prioritising investing, with over half of American Gen Zers (56%) already doing so (CFA, 2023). Meanwhile, budgeting apps are democratising the financial landscape by giving more consumers the tools to manage their own money.
Key Stats
|
- Gen Z’s Retirement Foresight: In the US, 66% of Gen Zers stash a median 20% of their annual incomes in employer-sponsored retirement funds, compared to 12% saved by millennials and 10% by Gen Xers (Transamerica Institute, 2023). FOMO (fear of missing out) on long-term investment returns was cited as the main reason for investing – true for Gen Zers in the US (41%), Canada (41%), UK (43%) and China (60%) (CFA, 2023).
Gen Zers are not just stashing away cash for the future; TikTok has seen an uptick in ‘no-spend’ content (100.6 million views), where youngsters aim not to spend any money on non-essentials for a period of time.
Findings also show that 65% of Gen Zers use investment apps to trade – demonstrating how embedded investing is in this cohort’s lives – compared to 55% of millennial and 38% of Gen X investors (CFA, 2023). - AI Enters Fintech: Banks are releasing consumer-facing tools that use generative artificial intelligence (AI) to power up clients’ finances. Chatbots and AI assistants are the go-to: 46% and 41% of US adults respectively state they’d be comfortable using these services (Morning Consult, 2023). However, 51% feel uncomfortable about using AI for investment recommendations without human oversight (Morning Consult, 2023).
Dutch mobile bank Bunq launched its AI chatbot Finn – which replaces the in-app search function – in December 2023. Users can ask the bot about spending habits, such as ‘How much do I spend on groceries each month?’, or find information like names of previously visited restaurants.
Meanwhile, UK-based AI budgeting app Cleo has a ‘roast mode’, which playfully shames users’ spending habits with comments like: “Here are the companies currently bleeding you dry – Walmart: $57, Heb: $43.” The app also drafts letters to negotiate rent, credit card fees and interest rates with its Haggle It mode.
For more, see Financial Wellness in the Inflation Era.