Could you go a month without spending money out on dining?

Pluto Money thinks you can. The Barclay’s accelerator-backed startup wants to get Generation Z past the errors of prior generations and uses challenges and games to get them to save. Grit Daily chats with CEO Tim Yu to find out the full details following its launch.

  1. Pluto Money works with Gen Z finances. How bad is it?

The pain points around Gen Z finances are different from the ones around millennial finances.

Millennials accumulated a ton of student and credit debt, entered a workforce with very little to no financial literacy, and had to transition into an era of mobile, contactless payments and subscription models as financially unprepared adults. As a result, they need lots of bandaids to relieve their debt, saving and spending problems—such as round-up automated saving tools.

Gen Z saw the struggles of millennials and their parents who suffered through the Great Recession. Also, the world of cashless transactions, rising higher education costs and omnipresent advertising became normal to them during and before adolescence, along with stories of consumers getting taken advantage of.

As a result, they refuse to make the same mistakes. They’re researching financial planning earlier, working earlier, saving earlier, spending more conservatively (value-driven as opposed to frugality), and trying to avoid student and credit debt as much as possible—just to name a few.

There are very few tools empowering them to take control of their financial goals as young adults during their most formative years—before it’s too late. For example, the average age of most automated saving tools’ and neobanks’ customers is in the late 20s to mid 30s! Yet 70% of college students are still financially stressed.

  1. Pluto holds itself out as a “guide” of sorts. Explain how it works.

First, users set near-term saving goals they want to save for (wishlist, bucketlist, adulting items). Then they securely link their banks, so Pluto can identify saving opportunities and recommend simple challenges tailored to their finances—clear actions they can take to save towards their goal. Pluto currently focuses on saving by spending smarter, so we recommend “Spend Less” challenges based on frequency and amount spent for various categories and merchants.

Let’s say a user does a “Spend Less on Eating Out” challenge for December to save up for a music festival. We’d suggest a spending benchmark for eating out based on their historic spend, and also provide anonymous peer spending benchmarks. They can follow our suggestion or set their own. When they spend under their benchmark for eating out, they’d save the difference towards that music festival. The challenges are automatically tracked, and Pluto nudges them with motivating notifications. The savings are virtual now, but we’ll launch the Pluto savings account via partner bank soon!

Moving forward, we’ll support more types of challenges (i.e. save from paycheck, save regularly, spend less than similar peers) and expand the types of financial goals (i.e. build credit score, pay off debt). We’re building a powerful recommendation engine that can: (1) Guide users to pick the right financial goals to begin with; (2) Optimize how users achieve their financial goals via personalized and actionable sets of challenges.

We’re all about breaking financial goals down into simple, fun and optimal steps that users can easily take—all in one place. By making that process approachable, smart and actionable, we’ll empower Gen Z to make it through college and enter the workforce financially prepared.

  1. Is Gen Z really that blind that it needs a guide? Why can’t Gen Z figure out finances themselves?

Although Gen Z may be motivated to manage their finances better at a much earlier age than other generations, they are still young. The oldest Gen Z are now in college and workforce, which is the most formative years in their adulthood and when a lot of their financial needs and behaviors change. But during these significant years, they rarely receive enough education and resources on financial literacy, and on top of that, have to juggle a lot among academics, extracurricular, career, social life, and personal growth. Between the lack of knowledge and stress that comes from balancing every aspect of their lives towards adulthood, finance naturally becomes a negative, overwhelming experiences, which as a result causes inaction and avoidance. The guidance helps these financial novices set relevant, shorter-term goals to keep themselves motivated, provides contextual insight into their finances so they have a better understanding of their money, and makes it easy to take action towards reaching their goals. This makes managing their finances more approachable, fun, and digestible.

  1. What is Gen Z most worried about when it comes to finances?

Getting into student and credit card debt, and not having enough financial stability to survive economic downturns. That’s why they’re avoiding credit cards, considering alternative forms of education (besides 4-year colleges), doing more side income gigs than ever before for extra income, saving money earlier, and taking more initiative in pursuing careers that provide financial stability or lead to financial freedom.

  1. Gen Z is so young with plenty of time for mistakes and opportunities. What will Gen Z be known for?

For being the “doer generation”. They take actions early on to create a better future for themselves—whether it’s marching to Congress as high schoolers to protest social injustice, starting businesses as teenagers, proactively seeking financial literacy education in high school and college, just to name a few.

Also for being innovative and entrepreneurial. As technology natives, they grow up consuming so much information about all kinds of problems in the world, but they also have access to so much information that could help them solve those problems. That leads them to become more creative and solution-driven than any previous generations. And as the most diverse generation in history, they’re more likely to have non-traditional views—which feeds into those traits.

  1. How do young people learn about finance today?

Most Gen Z gets initial advice from their parents—especially when it comes to setting up that first bank account. But as digital natives, they’re also learning more about finances from online searches, social media and mobile apps more than any other generations. They research options before making decisions more than any previous generations—whether it’s finding the best financial products to sign up for or apps to manage their finances. Furthermore, they’re seeking financial literacy education in college more than ever, and as a result, universities are investing a lot more into providing financial literacy programs to students.

  1. Which institutions does Gen Z trust least?

Financial institutions that don’t:

  • Prioritize their financial well-being.
  • Provide mobile-first solutions with optimal speed, convenience, and immediate access to straightforward & practical information.
  • Exhibit authenticity and transparency in how they do business and connect with them.

Gen Z might open up their very first accounts with the large traditional banks, or local community banks or credit unions—likely because of their parents. Unfortunately, most of those fit one or more of those above points. So once they gain independence as young adults, they’re likely to switch if the institution doesn’t serve their needs and align with their values and ethos (they research options more than any other generations). And if they research financial products themselves, they’re likely to pick institutions that better serve them from the start.

Jordan French is the Executive Editor of Grit Daily. He is a multi-media tech journalist on the editorial staff at TheStreet.com and a Fast 50 and Inc. 500-ranked entrepreneur. He is the founder of Notability Partners and the co-founder of BNB Shield, Lisbon Hill Farms, Status Labs, BeeHex, BlockTelegraph, and Grit Daily. A biomedical engineer and intellectual-property attorney, French is the author of upcoming book, The Gritty Entrepreneur.