Over 80% of Americans feel that financial stress is having a negative impact on their mental health, according to an Ally survey. Additionally, nearly half of Gen Z Americans experience weekly stress attributed to money matters while feeling less in control of their finances.
Ally Bank Head of Money Wellness Jack Howard comes on Wealth to have a conversation with Brad Smith on Gen Z's impulse buying habits, being more mindful about spending and saving, the extents of the strain from financial stress, and building up financial confidence while creating an emergency savings fund.
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According to a new survey from Ally, 83% of Americans say financial worries are impacting their mental health. And the impacts are being felt particularly hard by Gen Z. Nearly half say they're stressed about money at least once a week and only a third feel like they're in control of their finances. Here to break down the survey and how Gen Z can start building a strong financial foundation, we've got Jack Howard, Ally Bank Head of Money Wellness. Jack, great to have you on with us. So what are some of Gen Z's financial priorities from what we're assessing and hearing?
Yeah, we're finding that their financial priorities, they're not in alignment with what we want to see. There's a lot of impulse spending that's taking place, primarily stemming from social media. We're finding that nearly 50% of Gen Z are spending impulsively, really with the goal of buying things to post on social media, which is leading to not mindful spending, not really aligning with goals and values, and not really creating that experience that we want to have with money. So there's definitely an opportunity.
Nearly half of Gen Z said that they've made those impulse purchases based on social media, as you were mentioning. Looking at some of the stats here. So what's the best way to kind of catch yourself, address it, and then perhaps kind of course correct or turn the ship around?
Yeah, the opposite of being impulsive is mindfulness. So we want you to just pause when you see that item on social media, pause for 48 hours, give it some time to reflect. I want you to think about your goals and values. What are the things that you have planned for your life when you think of your finances? We want you to think about the why behind the purchase. Why are you buying it? And more importantly, a year from now, what will that purchase do for you? What is the return on joy? Because at the end of the day, we want money to be used as a tool to create experiences, and if we're spending impulsively, that can't happen.
All right, return on joy. Forget and move over return on investment. Uh, well, maybe it's one and the same. Return on joy, I like that one. How is financial stress negatively impacting Americans' personal relationships and even mental health?
Yes, so we're finding that, um, when we look at the idea of your emotions, there's a class that we teach called Money Plus You. And we're finding that people are saying they're stressed, they're anxious, and it's creating them to have this place of feeling paralyzed. When you feel stressed, you don't have action. So what we suggest in that class is to reset how you're thinking about money, shift your thoughts to get to better actions, so we're not paralyzed. Then you can actually move to saving, you can move to investing when you have a better relationship with money and your mindset shifts.
How immediately after beginning to get into better saving and money management habits do you see that Gen Z and other generations as well are able to kind of build up their financial confidence?
We found that there is a direct link to saving and your confidence. So we want you to think about automation when you think about your savings. Start with just a little bit. You can do $20, $100, start saving. That immediately will impact your confidence with money. But I realize that not everybody has that confidence and that muscle memory to save, which is why we created Money Groups. We want to also understand that some people have behaviors, they have past memories with money, uh, messages that they may have about money that stopped them from actually implementing those skills, which is why in some of our classes we help people to address that so that they can get to a place of actually having a savings account.
Well, we understand that only a third of Gen Z may be able to handle an unexpected $1,000 expense. How can they start building their savings in the emergency fund just in case it needs to be tapped?
Yeah, again, that automation, we have to make saving a priority. It really increases your confidence with money. And once we get past that automation, really looking at the why behind your savings, setting those long-term goals, looking at the future, understanding those values. So when you are faced with those decisions of, should I spend, or should I save, you are grounded in those values, and it helps you to make the right decision.
Jack, great to catch some time with you here. Thanks so much for joining us here.
Thank you.