In today's rapidly evolving economic landscape, financial literacy has become more crucial than ever. Gen Z, the generation born between the mid-1990s and early 2010s, is taking a proactive approach to learning about money and budgeting.
Despite stereotypes that portray them as financially irresponsible, many members of Gen Z are keen to enhance their money management skills.
Why it's important
Gen Z is growing up in a world marked by economic uncertainty. They witnessed the financial struggles of their parents during the 2008 recession, the economic impact of the COVID-19 pandemic, and the rising cost of living. All of which have heightened their awareness and need for financial stability.
With the increasing cost of higher education, many Gen Z individuals are accumulating substantial student loan debt. They are acutely aware of the long-term financial implications of this debt and are determined to manage it wisely.
Gen Z is also entering the workforce in an era where the gig economy is thriving. Many individuals are working as freelancers, contractors, or in part-time positions with no benefits or job security. In fact, almost half of Gen Zs have side jobs as money fears have taken over, a recent 2023 Deloitte survey found. This drives them to become financially independent and capable of managing irregular income streams effectively.
Gen Z finances: How they self-educate
Gen Z is known for its proficiency in navigating the digital world. They often turn to websites, YouTube channels, and social media platforms such as TikTok for financial advice. They're tech-savvy and often use budgeting and financial management apps such as YNAB and Oportun, which allow them to track expenses, invest and save, all from the convenience of their phones.
Many educational institutions and employers are recognizing the importance of financial literacy and are incorporating it into their curricula and training programs. Gen Z members are taking advantage of these opportunities to gain a more structured understanding of financial management.
Gen Z savings: Their most popular financial goals
In 2023, the most popular financial goal for Gen Zers remained the same as last year, with 39.5% of the generation aiming to increase their income. However, 27.3% of them are now preparing to buy a house, with homeownership-related goals growing from 37.3% in 2022 to 45.1% in 2023.
Despite higher mortgage rates, rent and real estate, almost half of Gen Zers have homeownership goals, including saving for a home, buying their first home, or moving out of their parent's house, according to a study by Rocket Mortgage.
Benefits of financial literacy
Being financially savvy equips Gen Z with the knowledge and tools they need to make well informed financial decisions. It empowers them to take control of their financial futures and reduce the stress associated with money matters.
With a better understanding of budgeting and debt management, Gen Z can also navigate the challenge of student loans and other debts more effectively, which can help guide them on how to save for short-term and long-term goals.
By learning to budget, Gen Z can create a safety net for unexpected expenses and emergencies, and this financial security ensures that they are better prepared to handle unforeseen circumstances, reducing financial stress.
Gen Z's proactive approach is a testament to their resilience and adaptability in an ever-changing economy. As Gen Z continues to embrace these opportunities for financial education, they are laying the foundation for a more financially secure and stable future. They are attempting to break the cycle of financial instability that has plagued previous generations and are working to manage their finances more responsibly.
