Gen Z more likely to take care of their money in high interest savings accounts

After growing up in a pandemic and facing a cost of living crisis, Gen Z are choosing to do interesting things with their money compared to other generations.

Younger Australians are opting to make the most of higher interest rates according to new research.

Two thirds of Gen Z – aged between 18 and 29 – have placed their savings in a high interest savings account compared to half of Australians over the age of 30, according to new research from NAB.

Despite preconceptions that young people may make a mess of their finances, the new data shows that Gen Z are emerging as savvy savers, according to NAB Personal Banking Executive Kylie Young.

“There’s actually a bit of an emerging trend with that cohort, which probably chimes a bit with sort of the economic times that they’re experiencing as well, but for sure they are wanting to take control of their financial future, boost their savings,” Ms Young said.

Two thirds of those aged 18-29 have a high interest savings account, compared to 50 per cent of those over 30. Picture: NCA Newswire

The push for young people to save their dollars and ensure that they’re getting the highest return comes down to one thing: property.

As house prices soared to new heights during the Covid-19 pandemic, it meant that young Australians have had to work even harder to save up for a deposit for their first home.

“For that particular cohort, more than any other age bracket, they are wanting to invest in property,” Ms Young says.

“They need to really have focused efforts on saving for that deposit and based on property prices are going to need to be saving more than they once thought.”

Luckily for those wanting to get the most out of their savings, the Reserve Bank’s decision to embark on a months long journey of raising the cash rates means that they’ll be getting more out of every dollar they put in the bank.

Several banks have set up savings accounts with high interest rates just for young Australians, according to RateCity.com.au research director Sally Tindall.

Gen Z’s motivation to get into Australia’s very competitive housing market is behind the boost in savvy savers. Picture: NCA NewsWire / Andrew Henshaw

“I’m not surprised about the statistics, there’s a number of savings accounts on the markets that are designed for young Australians,” she said.

“In fact, there’s about five or six products in the market catering for that young adult age bracket, which means that there is a market there and for many of the banks they’re probably thinking it’s a good way to get new customers in.”

Bank of Queensland’s ‘Future Saver’, bank account with the highest ongoing interest rate of 5.15 per cent, is set up specifically for savvy young savers between the ages of 14 and 35.

But there are also a number of other high interest savings accounts that appeal to young people such as ING’s ‘Savings Maximiser’ and MOVE’s ‘Growth Saver’ which both have 5.0 per cent rates.

RBA Governor Philip Lowe says Australians who are not with a bank that has a 4.50 per cent savings rate should “look around for a bank that will give that to you”.

As for the major banks, NAB’s ‘Reward Saver’ and Westpac’s ‘Life’ accounts rank the highest with 4.25 per cent, however customers will have to comply with conditions to get that rate.