Paying off existing debt is the top near-term priority for Gen Z college students, along with having financial freedom, goals which set them up for future home ownership, a study conducted for FinLocker, which provides a financial fitness app, found.
More than 27% declared that their financial goal for the next two-to-five years is paying off student loans, auto loans and credit cards. Meanwhile, 10% said it was a goal for the next five-to-10 years.
Financial freedom is the short-term goal for 24.5% and a longer term aspiration for 27.8% of respondents.
But the top goal in the five-to-10-year range is home ownership, with 29.6% of respondents prioritizing that. However, a significant share has this as their short-term objective, at 9.4%, the study found. The mortgage and real estate industries should find this last point encouraging, the report accompanying the survey said.
Among those Gen Zers planning to buy a home, 43.5% are looking to act between the ages of 28 and 32. The next largest cohort, 36.1%, expects to buy between the ages of 23 and 27.
Just under 14% said they were planning to become homeowners between 33 and 37.
Mortgage lenders need to figure out how to engage these Gen Z borrowers. In general, these firms reach out to potential customers using "high-cost lagging indicators," such as trigger leads from credit report pulls and multiple listing service searches, FinLocker said.
"However, as the survey validates, a more equitable opportunity exists to engage a consumer: connecting at the top of the marketing funnel through social media," the report noted. A recent report from National Mortgage News' parent company Arizent also noted the importance of having a mobile strategy to reach this group.
Friends and family was the top source respondents said they learned about finance from, at 41%, but social media was second at 15.8%.
"The recent rise of 'finfluencers' exemplifies how social media has become a financial education source for millions of young people," the report stated. "As 40% of Gen Z need to 'trust' the source of their financial advice, this is an opportunity for mortgage professionals to establish themselves as trusted resources by creating short and long videos on the topics Gen Z want to learn more about."
When asked how they would determine if they were ready to purchase a home, 63.5% said when they had significant savings for a down payment. This was down over 5 percentage points from 73.9% reported in a similar FinLocker study conducted in 2022.
Only 4.6% said they'd be ready to buy when they had a good credit score, down from 11.9% in the 2022 survey.
On the other hand, nearly one-quarter of the 2023 respondents, 24.1% said it would be when I have a family versus 12% the prior year.
Among the barriers they feel exist to achieving all of their financial goals, other priorities were cited by nearly 32%. Next was a lack of financial education at 19.4%; uncertainty about how to create a financial plan also came in at 19.4%.
Unable to save enough money was the response of 14.8%, while 10.2% declared they had no barriers.
FinLocker partnered with the students in the American Marketing Association group at the University of Southern California to conduct the survey over a three-week period in April.
The survey featured answers from 171 respondents, with 83.5% being between the ages of 18 and 22; 10% between 0 and 17; 4.6% between 23 and 30 and 1.8% between 31 and 40. The U.S. Census Bureau uses 1997 as the start year for this generation, making the oldest members approximately 25 to 26 years old.
By gender, 62% said they were female, 35% male, 2% non-binary and 2% preferred not to say.
