We were all once part of the youngest generation of adults, but for today’s cohort, the challenges of managing finances amid inflation, housing affordability issues, and now a trade war, is worsened by a lack of knowledge.
Of these issues, inflation continues to dominate with 46% of Gen Zs citing this as the issue their finances are most burdened by, beating factors including their income, debt, and housing costs, according to a new survey from WalletHub.
Not that previous generations necessarily had it easy. Simple research reveals the challenges that previous generations had at a median age of 20-21, the same stage that Gen Zs are at today.
For Millennials, it was the Great Recession that was hitting hard with a housing and financial crisis in the late noughties; Gen X was still impacted by the fallout from the Gulf War and the savings and loans crisis of the early nineties; and Boomers were dealing with the oil crisis and stagflation in the mid-seventies.
But as the WalletHub report highlights, financial literacy is key to navigating choppy waters and this is where Gen Zs are lacking. In fact, while 71% of Millennials think they’re better with money than their parents, only 48% of Gen Zs feel the same way.
Perhaps the multiple impacts of the pandemic, inflation, and trade wars have made Gen Zs cautious; most (66%) think that savings accounts are the best way to invest their money while 38% of Millennials say stocks is the better option (vs. 27% of Gen Zs).
Interestingly, the share of Gen Zs who felt cryptos are the best investment was zero – the same share as Boomers and less than the 2% of Gen X and 6% of Millennial respondents who said this.
“Young people have never really seen serious inflation before, but a general lack of financial literacy is playing a big role, too. More than 1 in 4 Gen Zs are not confident in their financial knowledge and skills,” says John Kiernan, WalletHub editor. “We really need to make financial literacy a required part of the curriculum, so young people can hit the ground running when they enter the workforce. Right now, they’re on their heels.”
Although retirement is some way off for Gen Zs, they are the only one of the four generations to tell the survey that they do not expect to retire more comfortably than their parents.
A recent survey from Talker Research also highlighted the burden that Gen Zs are feeling, with this generation most likely to say they feel their stress levels are at more than half their capacity with finances cited as the top cause.
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