Gen Z’s money balancing act: confident, yet only 1 in 5 are prepared for the unexpected with an emergency fund

• Gen Z (23%) are more likely to have multiple income streams compared to other generations, Gen X (15%) and Baby Boomers (10%)
• Almost a quarter of Gen Z Aussies (24%) invest regularly, with 91% starting in the last 5 years
• However, only 19% maintain a 3-month emergency fund

As a bank that supports Australians across all generations, ING has commissioned new research to better understand the evolving financial behaviours of Gen Z and how they compare to their older counterparts.

The research reveals that while Gen Z Aussies are the generation most likely to have multiple income streams (23% vs 15% Gen X, 10% Baby Boomers) and almost nine in ten (87%) engage in saving strategies, only 19% maintain a three month emergency fund.

Despite placing less emphasis on emergency savings compared to their older cohorts (25% Millennials, 24% Baby Boomers), Gen Z say that they trust the process more than other generations, with over two thirds (69%) feeling confident in the savings measures they have in place.

While they do feel the most pressure to be financially successful (38% Gen Z vs 32% Millennials, 20% Gen X, and 8% Baby Boomers), they’re more likely to implement a number of strategies than other generations, such as following a regular budget split (23%) and automating their savings every pay check (23%) to grow their wealth and contribute to their general savings.

Overwhelmingly, Gen Z believe higher earnings lead to happiness (57%), prompting them to take more proactive steps to boost income through investing and strategic saving. Outside of their typical day jobs, Gen Z Australians are also increasingly turning to alternative income streams, with (27%) prioritising investments in shares and property. Close to a quarter do so regularly as well (24%), with a whopping 91% starting in the last five years.

From Eurotrips to personal growth, when asked about their savings priorities Gen Z Australians said:

1. 50% are building their general savings
2. 27% are saving for travel
3. 27% are saving to invest in shares and/or property
4. 25% are building their emergency fund
5. 25% are investing in education and personal development.

When asked about how much they have stashed in their savings, Gen Z Aussies have an average of $16,475, compared to Millennials ($25,794), Gen X ($21,088) and Baby Boomers ($26,440). The majority of Gen Z Aussies have less than $10,000 in total savings.

Matt Bowen, Head of Consumer & Market Insights at ING comments on the report findings: 

“We understand how difficult it is for Gen Zs right now in this economic environment – but it’s exciting that they are so proactive in securing their financial futures.

“This generation has had the most access to wealth building tools, research and platforms by far – and it’s interesting to see that while the research shows Gen Zs believe earning more money equals more happiness, that’s not at the expense of their mental health and wellbeing, as 59% would take a pay cut for a job that is less stressful.

“But getting back to basics – it’s still really important to make sure we’re prepared for the unexpected. Whilst emergency funds aren’t popular, having some money in a high interest savings account can help when you’re in a pickle.”

Matt’s money tips for young Aussies: 

1. Open the conversation: Whilst every generation does money a little bit differently, there’s plenty we can learn from our parents, grandparents and friends about how they tackle money challenges.
2. A little bit on the side: Life is bound to throw a few curve balls. Emergency savings funds can help in these moments and shouldn’t be considered ‘dead money,’ particularly if they are put in savings accounts and earning you interest at the same time.
3. Learn before you invest: We are spoilt for choice when it comes to investment opportunities, and everyone has different ideas on how to grow wealth. But what’s most important is taking the time to learn about the investment, the risks involved and making sure you’re comfortable before diving in.