The Liquidity Crisis: Why Gen Z Can’t Afford to Wait for Rewards
Published by Trisha Asgeirsson – President, SKUx
46% of Gen Z live paycheck to paycheck. That single statistic explains why your points program is failing.
The financial pressure is real
Gen Z came of age during economic chaos – the 2008 recession during childhood, COVID-19 as they entered the workforce, then record inflation from 2021-2023. They carry student debt, face housing costs that have soared relative to entry-level wages, and have watched corporate loyalty mean nothing during mass layoffs.
They hold roughly 30% of their modest wealth in cash accounts – higher than older cohorts at the same age. This isn’t poor financial planning. It’s rational response to instability.
Points are a luxury they can’t afford
Traditional loyalty programs were built for consumers with a financial cushion. People who could “save up” rewards for aspirational purchases. A generation that could let points sit idle for months or years.
Gen Z has no such cushion.
When you ask them to accumulate 10,000 points for eventual $100 reward, you’re asking them to defer value they need now. That $100 could pay bills, buy groceries, cover transport costs. Locking it into your proprietary currency that might devalue, expire, or become worthless if your company changes terms is unappealing to the new wave of consumers.
They’ve watched it happen. Airlines raising miles requirements. Hotels moving to dynamic pricing that puts “free” nights out of reach. Coffee chains increasing stars needed for coffee rewards. These aren’t theoretical concerns – they’re recent history that bred justified cynicism.
The scarcity mindset shapes behavior
Gen Z exhibits what economists call liquidity preference – the desire for flexibility and immediate purchasing power. In surveys, 41% said they feel safer holding cash than investing. Not because they’re financially illiterate, but because they’ve learned cash provides options when stability is uncertain.
$50 in cash can address whatever emergency comes up. $50 in airline miles is useless if you need money for a car repair.
This generation also exhibits “use it or lose it” mentality. They prefer to earn and spend quickly so value doesn’t slip away. One survey found they feel safer with “cash stuffing” – physical envelopes of money for budgeting – than trusting digital points systems.
What this means for your program
Cash-based rewards function as micro income for this generation. Brands that help young consumers stretch their budgets – via instant cashback, rebates, immediate incentives – win trust and goodwill.
Virtual prepaid cards delivered in under 60 seconds provide genuine financial value when customers need it, not months later when they’ve forgotten why they earned it.
Sources: Thewisemarketer | Empower
