Ditching The Stereotypes: Unveiling The Financial Savvy Of Gen Z (2024)

FAQs

Are Gen Z financially savvy? ›

For example, a new study by the Investment Company Institute (ICI) finds that “Gen Z households have nearly three times more assets in the [retirement] plan accounts (adjusted for inflation) that Gen X households did at the same age.” More Gen Z-ers have retirement plans set up and they've saved more in those accounts.

Gen Z continue to struggle with building savings and contributing to their retirement. Over half (57%) of respondents do not have enough emergency savings to cover three months of expenses. Nearly one-third (30%) feel they don't make enough money to save.

Gen Z is facing persistent and diverse financial challenges

They're struggling with increased housing costs, student loan debt, and rising prices on everyday purchases like groceries, all while wages have stagnated for workers across many income levels.

Financial literacy is the ability to understand and use financial concepts, including topics like budgeting, saving, investing, and credit. According to a Financial Industry Regulatory Authority (FINRA) survey, only 24% of Gen Z respondents could correctly answer four out of five financial literacy questions.

Generation Z adults—individuals who are between 18 and 25 years old—prove to be more financially sophisticated than any previous generation was at their age, according to The 2022 Investopedia Financial Literacy Survey.

Key Findings. Gen Z is spending more than millennials on housing and insurance. Gen Z has more debt than millennials did, even after accounting for inflation and higher incomes. Roughly 1 in 7 Gen Zers are maxed out on their credit cards, more than any other generation.

The state of the world also fuels Gen Z's pessimism. An ongoing study at Montclair State University finds that Gen Zers perceive the world as more dangerous than their older counterparts. They're more likely to feel anxiety about extreme weather. Active-shooter drills became the norm while they were in school.

American Gen Zers, the oldest now entering their late 20s, have already accumulated substantial wealth through inheritance, investments, and entrepreneurship. Cerulli Associates estimates a seismic USD 84 trillion will transfer from baby boomer wealth in the USA to heirs, with Gen Z front and center.

(NewsNation) — Mortgages make up the bulk of household debt but a new analysis shows most Americans owe thousands of dollars beyond their home loans, with members of Gen X carrying the highest balances.

Why can't Gen Z afford anything? ›

Millennials and Gen Z face financial challenges their parents did not as young adults. On top of carrying larger student loan balances, their wages are lower than their parents' earnings when they were in their 20s and 30s.

Gen Z really do have it worse: Those in their early 20s are earning less and have more debt than millennials did at their age. The report also revealed that 14% of Gen Zers are “extremely stressed out”, compared to 8% of millennials in 2013.

Wealthiest Generation: Baby Boomers

According to the Federal Reserve data, baby boomers – people born between the 1946 and 1964– win the top spot for the wealthiest generation in the U.S. In aggregate, their total net worth is $78.55 trillion.

However, among all of the generations, it's Gen Z that is proven to have the lowest financial literacy levels.

UK-based influencer Andrea Cheong is among a group of influencers leading the underconsumption trend. Exhausted from a rising cost of living and non-stop ads, some young adults on TikTok are pushing back.

They are generally more pragmatic, with both complicated idealism and worries for the future. Gen Zers dream of personal career fulfillment but expect economic struggles. They have less positive life outlooks, with lower levels of emotional and social well-being than older generations.

For instance, baby boomers feel more financially responsible than other generations; Gen X is most likely to feel financially insecure; millennials have higher ownership rates of various retirement accounts; and Gen Z is the most comfortable talking to their friends and family about finances.

1-in-5 of Gen Zers live with their parents to save money. Although Gen Zers are 12% less likely than older generations to invest in a 401(k), they are 11% more likely to invest in a Roth IRA. Gen Zers are 62% more likely than older generations to have no expectations of returns on their investments.