Why Is GenZ So Poor |
Why is GenZ so Poor:- The crazy thing about our generation is that we are earning more than our parents. But this generation is the poorest. We spoke to 12 young people between 23 and 27 across six cities to understand their money decisions. Aesthetic items that I buy. Kangal! In the last week of my month. They definitely tricked me. I kept saving. I am actually guilty of impulse shopping. We compiled, pattern matched and found four stories which were similar to all of them. And I’m sure it’s also similar to you.
Before I tell you about these four money decisions, I want to tell you about Siya, our sixth interviewee. Her day starts with the coffee machine and the only time she breaks her resting poker face is when she gets a message on the first of every single month. But when she joined her first job, she carried a heart full of dreams and a desire to give her parents their own home. But today she can’t imagine owning the house anymore. Because she’s buried in a debt of 11 lakh rupees. This is Siya’s story. In fact, this is happening to all of us and we don’t even know it. It starts with one misdirection, then the next, then the next, then the next. And before we know it, our life is completely changed. Actually, let me tell you about the first decision. In 2014, I took a flight from Delhi to Bombay for a client that I was trying to work with. Now when I landed at the airport and took a taxi to the meeting, I saw ads. You know those big hoardings everywhere and they all had Nike Airs on them. So this one ad and the smartest people in the world convinced me to buy the product. Sounds like normal marketing.
Why Is GenZ So Poor |
But you know what? The billboard has changed. The billboard is now on your phone. And the crazy thing is that this is data backed. Which means they can show an ad, measure the number of impressions, see how many people clicked and also measure how many people converted. And run multiple studies on this ad with different copy and different design to find which one is the most addictive and which one converts the most. Which means you are a test subject. And the smartest people in the world are figuring out how to sell something to you. Every hour, every day. 550 crore Internet users and 520 social media user lab rats who can be quantified so you can buy, so you can pay, so you become poorer. This is actually a science.
It’s called the stimulus and response theory. Which means that people have a certain desire which you stimulate using certain form of clothes, ads, copy and visual Graphics. And then they respond with likes and shares, which is how advertisers know that something is needed. And to fill that gap, they actually run those ads to sell you an object. And this creates habitual consumerism, which means you keep buying stuff even though you don’t need it because, well the payment just happened. And our parents actually had a great solution to this. Seeing an ad on a newspaper, turn the page. Hearing something in the radio, zip, zip, zip, next channel. You can always flip the channel on the TV as well. But for us, the Internet has actually brought content and ads together. Remember, there was always a popular group, at least I had one. And these were the coolest kids. They didn’t study much. They were good at basketball. They didn’t care about anything. And we all have these groups back in school that we loved and we would switch, sort of imitate them or at least want to be like them.
But back then, there was no Instagram. Today, the most popular kids in schools don’t have 10 or 20 followers on the Internet. They have a million, which means everyone wants to talk like them, have tattoos like them, work out like them, have friends like them, have clothes like them, and if they’re wearing something from a brand, you want to buy it. This report from BCG talks about how Gen Z uses influencers as search engines to find out what’s cool, what’s not, what’s hot, what’s cold, what, what should they be wearing, what should they be watching, and what’s the new trend. And because of this influencer culture, the modern billboard isn’t a billboard or an ad. It’s a frickin selfie. According to Harvard Business Review, 75% of brands now have a dedicated budget for influencer marketing. But why? Why would they spend money on influencer marketing?
It’s because of originality. When someone opens up a piece of chocolate casually and says he loves this chocolate and you love this person, you are now imitating the most popular kid in school. It’s the best way to sell. And Sia too fell into this vicious circle. An aesthetic reel here, a beautiful product there, and her favorite influencer saying, check this out, two clicks. But the problem isn’t with the creator or even the content. It’s actually how easy it is to pay. In other words, I’ll pay later. UPI is the most popular between ages 18 to 30 because of convenience. People think because it’s easy they’ll use upi, but because it’s easy, they’ll actually spend more. You know, people who are spendthrifts. They should not be using UPI because it’s just too easy. Actually that’s not that bad because. You are spending your own money. So you think this would stop the downfall, right? If you don’t have it, you can’t spend it, right? Innovations in fintech have brought to you ‘Buy now, Pay later’ And this used to happen in the past too. You would go to your local Kirana store and you know you have Kundan Bhaiya over there and you would buy something and you’d say bhaiya, I’ll give the money later. And this was okay until a point where it crossed 500-600 rupees. And he said bhaiya, please give my money back. You owe me 500 rupees.
Why Is GenZ So Poor |
This way you wouldn’t overspend and he wouldn’t give too much credit and you’d still be friends and there’d be no interest. But now this exact same relationship on the Internet is on steroids. Here you don’t know Kundan Bhaiya and your total outstanding amount could be 50,000 rupees. And maybe you don’t even have that money. Most of the iPhones in the country are on credit. The interesting thing about BNPL is that you can see the transactions rising. So the number of transactions is going up. You can also see that the amount in value is also going up and most of it is coming from the younger generation. It feels absolutely okay because everyone around you is doing it. 40% of Gen Zs taking debt have unsustainable levels which means they can’t actually pay it. Added to that we also have the growth of credit cards, primarily fueled by millennials and Gen Z’s.
You know when we were kids we’d sit down in the drawing room and listen to dad. He and mom would debate about what the next thing we should buy. Is it going to be a study table or is it going to be a brand new cooler? And we had to choose only one. And after all of this debate we would finally decide and the next month we would go and actually purchase that item. There was so much of planning and effort that went into that one item which would come into our home. But now Siya can look into her phone and decide absolutely alone whether she should use a three month interest free loan or a six month with interest loan for her fifth purchase of month.
And that’s where we saw a shift from saving money to take a loan. What’s the inflation in India? 6%. Right? You’ve probably heard this in the news or from the papers. But what if I told you this is completely wrong when it comes to your life’s context. Let me explain. The government calculates inflation by simply looking at this basket over here which has different items. Now it tracks the prices of these items over a period of time. And the difference on this chart gives you a percentage increase. In this case it’s around 6%. But do you really think that all of these items went up by 6% for you? I really mean you actually open last year’s grocery list and this year’s list with all these items, is it actually 6%? It won’t be. Because all of us are in a trap of our ambitions. We all want to lead a better life. And you guys don’t belong to this chart over here. You guys belong to the sexier chart, this one, the OTT, the ordering. All of the nice things in life are here and so is your debt. This is called lifestyle inflation. And lifestyle inflation is the real inflation you should be tracking. And before I tell you the fourth point, think about Siya for a moment because her story is all of our stories. It starts completely normal and harmless. You buy a few things here and there, there’s a shopping spree, maybe you go out and maybe have a meal or two or three, maybe a little too often.
Why Is GenZ So Poor |
Siya’s 11 lakh debt is basically convenience spends plus impulse buys plus lifestyle upgrades she definitely can’t afford. Fueled by credit multiplied by time. The fourth money decision is actually a challenge. Every generation has a challenge that is presented before them that seems really, really tough to surmount. And for us, it’s not a war or disease or something that can really be bad for our entire life or family. It’s actually the abundance of everything. We have access to, unlimited knowledge, skills, money, and maybe even the job that you always wanted. But the problem in the abundance economy is that you get totally confused.
And other people, society apps tell you what you need to do to be happy. But the real secret here is if you can figure out what you want in life and you exactly go after that without any outside influence, you, my friend, would have completed the challenge. Your formula is, and the right hand side of it would say happiness because that’s all that really matters.
Read More |