Mind the Gap: How Gen Z is trying to beat inflation

CURATED READS FOR GEN Z—AND THEIR Z-CURIOUS COLLEAGUES

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Welcome back—will you get to retire? Plus: crypto’s climbing. Scroll for more.

first up

Same money, more problems. Inflation is at a 40-year high, and the prices of major Gen Z expenses like gas, rent, food, and tuition are rising especially quickly. Even the adored $1 New York pizza has taken the hit; I forked over $1.50 for a slice last week.

Cheat sheet: Inflation means that the same amount of yesterday’s money is worth less today—as in, it can buy you less because everything is more expensive. It happens over time and for many reasons, but not always this fast.

For a lot of us, this is the first time we’re hearing about what a problem inflation poses. But it’s top of mind for execs, who are concerned about the longer-term effects of uncontrolled price hikes. New survey findings show they consider inflation one of the top three threats to the global economy.

In inflation’s wake, some Gen Z members are already:

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facing deeper student debt due to rising tuition

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cutting contributions to retirement accounts

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moving back in with parents to save

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looking for new jobs that provide more financial security

And we keep hearing that we’re never going to be able to retire.

What can Gen Z do? It’s not necessarily in our control, but companies and policy makers are already working to control inflation and keep pricing fair. Still, it’s a good time to take stock and get serious about your personal finances.

Have a financial adviser? (I don’t.) But the wealth management industry and, more broadly, financial-services companies know we are coming:

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Women and first-time investors could well be the next personal-finance power players.

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New banking products developed for tomorrow’s customers—driven by the rise of crypto and other digital assets—could cushion the blow of inflation and help meet demand from people who are new to investing.

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Emerging financing models like “buy now, pay later” can give you more options when you reach the cash register, such as popular “Pay in 4” services—which allow consumers to split payments into four interest-free installments—often offered through an app or integrated into online shopping sites.

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Many are eyeing apps and platforms for trading stocks or tokens—Coinbase, for example, already has a staggering 68 million verified users.

Fintech and digital banking are booming, especially in Asia. But you might have already found free advice on #FinTok or #MoneyTok, hashtags on TikTok where people share finance tips. A recent survey found that 41 percent of American Gen Z investors looked to the app for advice. Real talk: not all of it is good, so tread carefully. (Note: McKinsey isn’t in the business of providing investment advice.)

A recent Ipsos poll suggests over 90 percent of Gen Z is anxious about their finances. Record-high inflation may be a fact of life for a while, but it won’t last forever. While we and the world ride it out, I’ll sure be watching my pennies.

visualize it

Crypto curious, but allergic to risk? Stablecoins—multiple private, stabilized cryptocurrencies—are a less volatile form of digital currency. Stablecoins gained steam during the first half of 2021, with nearly $3 trillion traded on exchanges. (Again, we don’t give financial advice.)

Chart showing the rise in circulation of stablecoins has closely tracked the volumn of cryptocurrencies

Got crypto? Stablecoins are a less volatile version.

WAIT, DON’T SCROLL

Crystal ball? Organizations can future-proof by planning for tomorrow’s changes today. Indonesia’s Gen Z is changing its digital culture (example: subscribing, not buying), and we have glimpses into four possible futures, from a retail metaverse to shared luxury products.

Scale it up. Half of the world’s internet users live in Asia, and Asian consumers are more concerned about environmental issues than their American or European peers. Online buyers there often choose green and even internet-only companies—sustainable-shoe company Allbirds began as an online-only shop.

Eat (and buy) your greens. Eighteen percent of Gen Z consumers in South Africa want vegan or vegetarian options. And 38 percent of South Africans opt for sustainable packaging, more than France, Germany, the UK, and the US (the global average is 23 percent).

GREAT NON-MCKINSEY PICKS

Report cards. Twenty-three US states now require high school students to learn about personal finance to graduate. It can be a stand-alone course or part of a larger curriculum—at my high school, we had to fill out dozens of fake tax returns to practice. [NYT]

Quit to succeed? Job hopping is up, and especially among Gen Z—one 25-year-old increased her salary from $62,000 to $130,000 by switching jobs every year and a half since she graduated. [Fortune]