Gen Z is on course to be the largest cohort of American homeowners and entrepreneurs, but many are risking this ambition by not getting the financial education they need.
Two reports highlight the paradox of ‘Zoomers’ with a desire to build solid financial foundations, but in many cases building up debt through poor management of credit card accounts.
And the generation’s lack of financial knowledge is a significant opportunity for advisors, something that Rachel Lawrence founder of Reverie Wealth and head of advice & planning at Monarch Money recently highlighted to InvestmentNews.
First, the good news. Gen Z focused Academy Bank polled 18-27-year-olds and found that growing savings (77%), building credit (51%), and increasing income (49%) are their top current financial goals. Further down the list are saving for a major purchase (39%), buying a house (36%), and paying off debt (33%).
The research found that most respondents are doing the right things to build their credit including paying bills on time and keeping their credit card balances low.
But this is not the case with all Gen Zs, as revealed in a separate survey of the generation from CreditCards.com which discovered that one in three respondents with credit cards currently carry debt, while 56% report missing or making late payments.
Ten percent of respondents have credit cards carrying debt of more than $5,000 and less than three in five have less than $100 in non-retirement account savings.
What unites both surveys is the need for financial education with credit and managing debt among the key topics required.
The Academy Bank poll found that almost three in ten of those that took part got their information about credit and credit building from social media, often relying on inaccurate information.
CreditCards.com found that nearly one of five of their survey respondents say they have little understanding of how their credit scores impact major purchases and 69% of Gen Zs believe financial literacy courses should be mandatory in both high school and college.
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