The Main Drivers
Decreasing
Capacity of Personal Agency
Personal agency is the ability to act independently and make their own choices to a better future situation, rather than simply react.
Various studies, including our own in 2024, consistently show that Gen Z in Indonesia still has a relatively low level of financial literacy.
This low level of financial literacy creates a feeling of powerlessness in controlling their own financial destiny. Instead of making strategic long-term plans, they tend to avoid complex decision-making or feel paralyzed by it.
Compounded by a digital environment overloaded with information and social pressure, Gen Z has a lower capacity to manage stress and uncertainty.
The bombardment of conflicting financial advice from social media and constantly changing consumption trends leaves them experiencing decision fatigue and vulnerable to external influences. The convenience of digital payments makes them more likely to engage in impulsive and consumptive spending.
5
Inclusion Without Literacy: Hidden Financial Risks
Qualitative research by
Researched for
Funded by
Internal Factor
Lack of self-control due to minimal financial literacy and an instant mindset makes it difficult for young people to restrain themselves from external influences and impulses.
External Push
Social pressure, flash sales, and online gambling encourage consumer spending and risky behavior. Instant loans with flexible terms are misleading through hidden interest rates, deepening the debt trap. Unverified influencers are becoming sources of financial information.
Key Findings
Impulsive and Reactive Consumer Spending
Wanting to Look Cool, Reactive Decision
The “money is always there” mindset weakens financial discipline and the desire to look cool drives short-term reactive decisions.
"I think it's a matter of pride. For example, as the head of a committee (on campus), I need to cover the costs of meetings at coffee shops or cafes."
—
Male Gen Z, 19, Surabaya
The Push for Discount Exposure and Online Gambling
Constant exposure to discounts and the rise of online gambling facilitate consumer behavior, fear of being left behind.
"My friend plays because of his circle. If he draws big, his friends often notice him."
—
Male Gen Z, 21, Bandung
Inconsistency and Weak Discipline in Saving
Minimal Strategy, Minimal Savings
Many Gen Zers rely solely on mental calculations and checking their account balances. This lack of strategy leaves them with little or no savings.
"Just estimating to keep my balance going. I figure, 'Okay, this much for that, that much for this—yeah, that should be enough.' I monitor my balance limit. For example, if it goes from 2.8 million to 2.6 million, then I'll hold back."
—
Male Gen Z, 21, Surabaya
Saving Starts when there’s Bad Experiences
Awareness often emerges only after experiencing a negative situation. However, it often fails due to lack of discipline and impulsiveness.
"I once ran out of money and couldn't buy food or other basic necessities. That experience motivated me to save."
—
Male Gen Z, 21, Bandung
Overestimating Their Loan Repayment Capacity
Borrowing without Enough Consideration
Easy and instant access has made Gen Z disregard loan interests. Most of them are used for lifestyle purposes, funding campus organizations, or even online gambling.
"Many are trapped in debt through Buy Now Pay Later. They have no work and no idea how to pay it off. They keep looking for loans from friends or other means."
—
Female Gen Z, 20, Surabaya
Dig a Hole to Cover the Previous Hole
Some digital lending platforms hide interest and fees behind claims of "low" rates. As a result, the amount they have to repay is actually much higher.
"For example, one of these platforms doesn't clearly list the fees. You borrow 500,000, but later you found out that have to pay back 800,000."
—
Female Gen Z, 21, Surabaya
Hesitant and Instant Mindset in Investing
Hesitation in Investing
Complex and difficult-to-understand investments discourage Gen Z from investing. The rise of “investment” scams doesn't help.
"Until now, I haven't dared to try. Some people say they have 3 million [in the account[, but when they try to withdraw, there’s only less than 1 million. That's what scares me; it's too complicated."
—
Female Gen Z, 22, Kendari
Lack of Literacy, Wanting Instant Results
Lack of knowledge about investment products, risks, and emotional decisions makes many unable to estimate profits and losses, resulting in them becoming victims of fraud.
"I was once a victim of the Binomo investment scam that went viral. I saw people show off their results, it seemed easy so I tried. It turned out to be a scam."
—
Male Gen Z, 20, Kendari