Many millennials consider the 2008 recession their introduction to economics. Even the so-called ‘geriatric millennials’ were only in their mid-20s when the Great Recession struck, while the youngest were about to become teenagers. It was an event that shaped their definition of money, as well as their careers as students and professionals — probably for their entire lives. It’s no wonder they’re one of the most pessimistic generations when it comes to their finances.
In much the same way, the COVID-19 pandemic has shaped Generation Z. This new generation, ages 9 to 24, almost perfectly mirrors millennials in 2008. A key difference, perhaps, is that these “digital natives” are constantly bombarded with news of the world through tech and social media, which replaced person-to-person interactions in a year of quarantining.
The oldest of Gen Z experienced the fallout from both the Great Recession and COVID-19. In a remarkably difficult time to afford college, find gainful employment or even think about buying a house, this crash course on economic insecurity will impact their views on money for years to come.
“Gen Z has had a tumultuous upbringing — even more than millennials. Their views on money have likely been shaped by a feeling of uncertainty and less the sense of entitlement felt by past generations,” said Jake Hill, CEO of DebtHammer.
With that understanding, here’s a look at where Gen Z stands on financial topics now.
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Gen Z Is Prepared for Anything
If you spend much time in Gen Z-dominated spaces like TikTok, you get the sense they’d be more surprised if the world didn’t end in some fiery, cataclysmic catastrophe. That’s not to say they’re an overwhelmingly pessimistic generation. But they’ve had to develop a realistic take on the world as very pressing issues like climate change and wealth inequality threaten their futures.
“COVID-19 taught Gen Z the importance of being prepared for unexpected events, especially on a financial basis. Losing a job along with current income taught many the importance of having savings to lean back on. This principle has been brought to the front of their minds, which is a crucial step for that generation,” said Jake J. Oyler, a 25-year-old financial advisor at Colwyn Investments.
They Are More Financially Conscious Than Previous Generations
Although the majority of Gen Z hasn’t yet graduated school or left home, those who have entered late teenagehood and adulthood are more cognizant of their money than generations past.
“All trends indicate that Gen Z has become more financially conservative due to the pandemic,” said Chris Nddie, co-owner, ClothingRIC. “For instance, the sale of makeup, which is often driven by younger customers, is at an all-time low.
“But this was expected. People turned toward minimalism, frugality and thrifting on the back of the Great Depression. It was until the baby boomers when people began to spend with freedom.”
They Recognize the Importance of Investing
Investing used to be a topic reserved for Wall Street. Even when it expanded beyond the ranks of the wealthy elite, it was largely confined to older folks who had both the financial means and know-how to make investment decisions. But in the tech age, pretty much anything can be learned with a Google, and investments can be made in mere minutes on online brokerage platforms like TD Ameritrade and Robinhood.
“(Gen Z) turned to social media to fill their time, where content about investing was abundant. The content inspired many to invest spare cash they had in brokerage accounts and taught the lesson of having your money earn you money. Also, the bandwagon approach of investing “together” in companies like GE and AMC seemed to stimulate their generation to begin investing,” said Kelly Welch, CFP, Girard, a Univest Wealth Division.
“It’s no wonder that Gen Z is investing more than the generations that came before them,” added Carter Seuthe, CEO, Credit Summit Student Loan Refinancing. “Everything with money is volatile for them; nothing that was expected has worked as it should.”
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They Expect More From Their Jobs and Employers
Despite Gen Z’s apparent money and investing savviness, or perhaps because of it, many won’t settle for mistreatment at the workplace. Even in the midst of economic and job insecurity, their standards for employers are higher than ever.
“COVID-19 made everyone reevaluate their relationship with material goods and money, but particularly with Gen Z. They were told growing up that they just had to work hard, study hard and meet the right people and they would have a job lined up nicely for them. However, for most people that did not happen, even when they did all the “right” things. Instead, Gen Z is likely to focus more on their own personal growth and have a job that falls in line with that, rather than the other way around,” said Matt Mundt, founder and CEO, Hug Sleep.
This prioritization of work-life balance, especially during a pandemic, has driven the popularity of remote work and flexible working options. In fact, a growing number of workers would rather quit their jobs than go back to working in an office. Companies still clinging to the office dynamic may have trouble attracting Gen Z workers, who will make up about 27% of the workforce by 2025.
“Gen Z adults are also scrappy. They don’t expect to be with a company forever, or even for five-plus years. They get what they can and move on. Unfortunately this also means the gig economy is thriving and Gen Z adults have fewer benefits than any other generation,” Hill said.
The Age-Old Debate of ‘Live Now’ vs. ‘Plan For the Future’ Remains
Living through two recessions has instilled a strong desire in Gen Z for financial stability. At the same time, it’s opened their eyes to the way they don’t want to live — struggling to get by, cooped up inside for a year. It creates an interesting paradox: Do I save all my money for the future or do I spend it on experiences that matter to me?
“If before the pandemic I thought that by the time I turned 30 I could buy a house, now I want to use that money to travel around the world…COVID-19 has accentuated the brevity of life, and (I) certainly don’t want to take a house to the other side,” said Miruna Necula, community manager, PhotoAiD.
But fear of instability is causing others to take a hard look at their financial futures and what they want them to look like.
“Now that it’s more challenging to find a short-term or low-qualified job, I am more concerned about my future. As a 25-year-old, I want to feel financially independent rather than relying on my family for support. Now I understand how important money is because it can give me the freedom to make my own decisions and provide the feeling of safety,” said Karolina Zajac, community manager, PhotoAiD.
Maryia Fokina, PR and content specialist, Tidio, summed it up: “I think COVID has changed our relationship with money in multiple ways, and the shift is fundamental. On the one hand, the desire to save more money is very real: You never know when the next crisis will hit in this unpredictable world. On the other hand, I feel like most of us turn to the ‘YOLO’ approach. Gen Z, like no other generation, realizes the effects of climate change, irresponsible political claims and the ever-growing impact of technology. Thus, many joke (with a tint of sadness) that there is no point in saving money now if our generation will probably not make it to retirement due to the climate crisis. COVID made these feelings even more real, and more young people started ‘living in the moment’ regarding money.”
Regardless of where any one person falls on the saving versus spending spectrum, the whole of Gen Z has undoubtedly been changed by the pandemic. And as more enter the workforce and exert power over the economy, what they’ve learned will change the future of the country.
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