Two Sharp Knives: Between Purchasing Power and Financial Literacy of Gen Z
How often do you purchase items in your e-commerce chart?
Hello, Buddy! Happy Tuesday, hope you’re feeling okay !!
Let's talk about finance literacy, gen z’s purchasing power, and what is gen z’s strategy to improve their economic situation. A week ago, I conducted mini survey on Instagram about purchasing power. I received a positive responses and I thank you guys for every response you’ve given. It helps me to unwire the tangled thread about this issue. This article can’t conclude the broad questions about it, however, I hope it can help you to think deeper about finance literacy in this generation.
I hope you enjoy it.
My friend and I seldom talk about our financial situation, we simply hide in basic sentences, like “My life is just so-so right now,” and agree with each other that we’re in the same situation financially but without a clear conversation. I assume this happened because the culture where I was raised believes that finances are a taboo topic to discuss. Until today, I wonder what could have happened if my circle had been honest about our financial situation with each other. Would it increase the level of trust between us or become a boomerang because of the ego and pride?
During our presidential candidate debate last February, one candidate highlighted their vision and mission of creating hundreds of jobs and promised to increase the productivity of the workplace by maximizing the technology, i.e. the internet. I was not surprised by this promise, any other candidate on many levels can make the same promises to the community. It also holds promise that increasing jobs and workers will increase a country's economic growth.
According to BPS, the total workforce in February 2023 was almost 146,62 million people. There was an increase in workforce participation by 0,24%. However, the population who work is almost 138,63 million people, the number increased by 2,2%. Although this number can be a milestone, the income disparity that Gen Z experiences is a huge discussion. The low monthly income could lead to lower purchasing power which also contributes to less economic growth. When the economy grows, particularly leads to an increase in the real gross domestic product (GDP), it can translate into higher purchasing power.
The vast majority of Indonesian Gen Z spending is on basic necessities, health, self-development, and recreation. But, is their income enough to fulfil all these needs? I conducted a mini research to find out more. In turn, 77,5% said that they feel confident with their income, enabling them to cover basic needs. This also shows that they likely have a higher purchasing power. But, I wonder, are they still able to save a portion of their income? Yes, they are able. Almost 83% of respondents said that they are capable of managing their finances and saving for their future which contradicts the statement, “Gen Z buys anything, but owns nothing.”
According to Bloomberg, the buying power of Gen Z in Indonesia is nearly $360 billion compared to $143 billion within just 4 four-year gaps. One of the assumptions of this huge number is the feature of “Buy Now Pay Later (BNPL).” I ask people about their purchases and the use of this feature. Among the people I asked, 61% said that they carefully consider each purchase and 94% consider saving now, buying later rather than buying now, and paying later. It feels like they have better control over their finances and better financial planning. This also suggests that many Gen Z prioritize their financial stability and long-term wealth. They are also more careful to not be trapped in the instant gratification of purchasing.
And still, are they still able to manage the small wage given to them or do they choose to get another job? Yes, based on my survey, 62% said that they actively seek out opportunities to increase their income which validates the report of IDN Media. This highlighted that Gen Z is not blind towards their finances and they are not making false purchases or impulse buying. They embody the idea of good financial planning and always seek improvement in their economy. This high awareness of their financial literacy can reduce social inequality and improve the household economy. This whole finding is eye-opening for me. Although the finance topics feel awkward to talk about in my circle, at least I have confidence that they seek help from professionals and increase their financial literacy.
Then, what about the presidential candidate’s mission to increase the jobs in the community? I agree that this mission is worth the struggle, but one has to find the needs of each generation because each generation has its struggle when it comes to the economy, the potential individual risk can be a boomerang or an opportunity to grow more.
Source:
Indonesia, B. P. S. (2023, May 5). Februari 2023: Tingkat Pengangguran Terbuka (TPT) sebesar 5,45 persen dan Rata-rata upah buruh sebesar 2,94 juta rupiah per bulan. Badan Pusat Statistik Indonesia. [Link]
Stone, S. (2024, January 29). What makes them buy: The Gen Z spending habits to know in 2023. The Shelf Full-Service Influencer Marketing. [Link]
Molenaar, K. (2023, October 18). 29 Statistics on Gen Z spending habits you should know in 2023. Influencer Marketing Hub. [Link]
https://cdn.idntimes.com/content-documents/indonesia-gen-z-report-2022.pdf
Purchasing Power Parities – putting a global public good to work in socioeconomic analyses. (n.d.). [Link]
Well, you’ve reached the end of the story today.
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