SPENDING AND SAVING: Gen Zs and millennials are taking a different path to wealth

South Africa's younger generations, Gen Z and millennials, are reshaping the landscape of personal finance, adopting new strategies for managing money amid economic uncertainty and shifting societal norms. According to data from SatrixNOW, a digital investment platform, nearly 57% of all inflows to the platform in 2022 and 2023 were contributed by individuals under the age of 40. These young investors also represented 56% of the firm’s tax-free savings accounts, 48% of its local currency investment accounts, and 44% of its retirement annuity accounts. Despite this growing engagement with financial instruments, the data also reveals a pattern of frequent withdrawals, suggesting that while young South Africans are participating in the investment world, they are not always holding onto their funds for the long term. Traditionally, the path to adulthood in South Africa followed a predictable trajectory: completing education, securing employment, purchasing property, and planning for retirement. However, this model is becoming less applicable for today’s youth. Many graduates find themselves entering a labor market marked by instability and limited opportunities. High rental costs have led to a trend of young adults delaying independent living, often remaining with their families well into their late twenties or beyond. This shift is not just about financial constraints, it reflects broader changes in how young people approach work, housing, and personal responsibility. A recent survey conducted by Standard Bank, titled the 2026 Youth Barometer, highlights that despite these challenges, young South Africans continue to prioritize financial independence, homeownership, career advancement, and long-term security. What sets this generation apart is their approach to achieving these goals. They are engaging with financial tools such as credit cards, savings accounts, investment platforms, and insurance policies at an earlier stage and with greater intentionality. For instance, credit cards are frequently used not just for discretionary spending but also to manage cash flow and accumulate rewards points. Similarly, personal loans among those in their early thirties are increasingly being utilized to consolidate existing debts and improve monthly liquidity. SatrixNOW’s findings underscore both the potential and the pitfalls of this behavior. While young investors are contributing significantly to the platform, they are also making substantial withdrawals. Between 2022 and 2023, individuals under 40 accounted for 59% of all withdrawals, though their share of the total withdrawal amount was only 20%. This discrepancy suggests that although young investors are active participants in the market, they are not necessarily allowing their capital to remain invested for extended periods. This pattern is partly explained by the high cost of living and the unpredictable nature of modern economic conditions. When faced with unexpected expenses or financial pressures, emergency savings, investments, and retirement funds can become vulnerable to depletion. Yet, the ability to build long-term wealth hinges on maintaining consistent investment over time, allowing assets to grow through compounding interest and market appreciation. Despite these challenges, there is optimism surrounding the financial habits of young South Africans. They are leveraging a range of modern financial tools, from tax-free savings accounts and retirement annuities to mobile banking applications and peer-to-peer lending networks, to manage their finances more effectively. Additionally, many are exploring alternative income streams, including side jobs and informal savings groups known as stokvels, which provide structured ways to save collectively. These efforts reflect a growing awareness that wealth creation involves more than simply increasing earnings; it requires prudent saving, strategic investing, and disciplined financial planning. As this generation navigates the complexities of adult life, they are beginning to recognize that securing a financially stable future means not only working harder but also managing resources more wisely.