The World’s Newest Adults: Everything You Need to Know About Gen Z’s Financial Situation

Gen Zers are the newest adults. Their ages range from 5 to 25 years old, making them born between 1997 and 2015. Gen Z is unique because they were raised with technology and are savvier and more intelligent in many ways than their predecessors, including Millennials.

But what about their financial situation? Only 24% of Gen Zers are financially independent by the age of 22. But there could also be a few reasons why — Gen Zers are still supported by parents at this young age, many are in college, and more.

So, what all do we know about Gen Z’s financial situation?

How Gen Z Compares With Other Generations

Gen Z is different from other generations for many reasons. They’re not only well-versed in technology but they rely on it. This means that Gen Z may not know traditional financial tasks, such as writing a check.

Visited Their Bank

The Federal Reserve states in 2017, half of U.S. adults with a bank account used their phones to access their accounts. And this trend has likely increased throughout the years.

But do Gen Zers visit their actual bank location? While they likely have been to their bank location, they don’t visit the physical bank building as much as Boomers, Gen Xers, and even Millennials. That’s because you can do most banking functions online or on the banking mobile app.

Written a Check

Checks are becoming archaic. This is why many Gen Zers don’t write checks, especially compared to Boomers.

Applied for a Credit Card

Gen Zers are still young and may not have a sound financial situation or even the need to apply for a credit card. All other generations have credit cards and use them regularly. Gen Zers are also smart; they see the financial mistakes that Millennials made and may be hesitant to sign up for a credit card.

Contributed to a Retirement Savings Account

Gen Zers are young and retirement is likely far from their minds. While most Boomers already reached this retirement age, Gen X is right around the corner from retiring. Even Millennials are taking retirement seriously and have contributed to their retirement wealth.

How Does Gen Z Handle Their Finances?

While Gen Z may not be as experienced in certain financial tasks as other generations, they do have many advantages over their older counterparts. Does that mean Gen Z handles their finances better?

First, Gen Z is likely in less debt than others. That’s mainly because Gen Zers are still young and less experienced in many areas of life. For example, Gen Z only owns 2% of the housing market, so many 20-something-year-olds aren’t paying off a mortgage.

However, many Gen Zers are still in school and hold student loan debt. Their debt will likely increase in the next coming years.

Is Gen Zers Receiving Financial Support?

One of the reasons why Gen Z has a more stable financial situation than Millennials is they’re receiving financial support, specifically from their parents.

Most Gen Zers are just starting out in the working world or are going to college. They can’t afford to cover their housing, groceries, and more.

This is the perfect time for Gen Zers to find ways to make money and save for the future. If you’re not sure where to start, take a look at some of these Grant Wydeven finance tips.

Does Gen Z Strain Their Budget?

It’s easy to get out with friends when you can’t afford it or buy a new phone that’s way out of your budget. Millennials had the bad stereotype of spending outside of their means. Is Gen Z following this same path?

Surprisingly, most Gen Zers don’t spend what they can’t afford. They likely watched the same mistakes that Millennials made and learned from them. They may also try and lower their spending as much as they can.

However, there are Gen Zers who make the same mistakes as Millennials. They may take those extra funds out of their savings or will put them on a credit card.

Financial Misconceptions That Gen Z Is Taught

One of the reasons why Gen Z may not be financially successful is some misconceptions that we’re taught. For example, a Gen Zer may have been told they’re too young to save for retirement.

Here are some other examples of financial myths.

Having Multiple Credit Cards Is Bad

As stated previously, most Gen Zers don’t have a credit card or even applied for one. They may not think they need one or they may have even told holding multiple credit cards is bad.

While collecting debt on multiple credit cards can be bad for your credit score, holding multiple credit cards won’t badly impact your credit score (though signing up for one may reduce your credit score). Actually, actively using your credit cards is good for your credit card.

You Need to Carry a Balance on Your Credit Card at All Times

Ideally, everyone should pay off the entirety of their credit card. If you carry below 30% of your credit card balance, it won’t dramatically affect your credit score. But all cardholders should aim to pay off the entirety of their credit card balance.

This is a common myth passed down from generations, including Gen Z. Fortunately, more education and better credit card practices are reducing these myths.

There’s No Need to Invest in Retirement at a Young Age

The younger you invest in retirement, the more financially successful you will be in life — especially when those retirement years roll around. Even if Gen Z only adds a little bit of money to a retirement savings account, they can experience some serious wealth once they reach retirement age.

Does Gen Z Have a Good Financial Situation?

We often wonder about the financial situation of younger people. But what about Gen Z? Gen Z saw the mistakes that Millennials made and are more educated in the ways of finances. Since Gen Z is young, they’re supported by their parents and don’t carry as much debt.

However, Gen Z was taught some common financial myths such as they’re too young to save for retirement. It does seem that many Gen Zers aren’t believing these myths and are putting financial health as a priority.

Do you want to read some more finance information and tips? Continue reading our blog!