3 Things To Know About Gen Z Women and Their Finances
In light of March being Women’s History Month, GOBankingRates is taking a look at gender gaps when it comes to financial literacy and money matters in order to empower women financially.
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According to a recent survey conducted by GOBankingRates, the majority of Gen Z women in the 18-24 range are not investing either because of a lack of money, knowledge or both. The survey also found that for 39% of women ages 18-24, inflation is the biggest source of their financial stress.
Here’s a closer look at where Gen Z women’s financial priorities — and insecurities — lie as well as some expert insight on how to start investing and navigating inflation as a Gen Zer.
1. Gen Z Women and the Investing Problem
GOBankingRates’ survey asked over 1,000 American women where they were investing their money. Surprisingly, a staggeringly high 61% of Gen Zers ages 18 to 24 are not investing. This age group topped all the others in this regard — with every other age group more likely to invest.
Gen Z women might be opting out of investing for a reason. According to the survey results 19% of young women ages 18 to 24 are not investing because they lack the knowledge to do so. However, the investing secret Gen Z women might not know is that they are likely going to be smarter investors than their male counterparts.
According to a survey conducted by Fidelity, women, on average, outperformed their male counterparts by 0.4%.
Despite women being better investors than men, many are not investing. With the majority of American women not feeling confident in their investment abilities, let’s look at some of the best ways for Gen Z women to get started investing.
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Investing Tips for Gen Z Women
When it comes to starting something new — like investing — it’s best to start small and gradually work up to more high-risk investments.
Prioritize Saving For Retirement
A great place for Gen Z women to start is to invest in their future.
“If your workplace offers a 401(k) account, take advantage,” said Julia Pham, wealth advisor at Halbert Hargrove. “If they offer a company match, then try to save at least what they are willing to match and target an overall savings of 15% to 20% of your gross paycheck.”
Use Smart Investing Strategies
You might be wondering why women tend to get higher returns on their investments than men. One reason for this success could be women’s tendency to invest more conservatively. According to a 2022 Wells Fargo study, women take on 82% of the risk that men take on.
In light of women taking on fewer investment risks, there are some things Gen Z women can do to start investing without taking on high-risk investments.
“Keeping a diversified portfolio and investing for the long term will not only help manage risks, but it also means that if the market takes a dip, you still have plenty of time to recover.”
2. Gen Z Women Want To Be Homeowners
The majority of young Gen Z women feel that the biggest barrier to achieving their financial goals is a lack of money. These young adults are often feeling the pressure of sky-high rent prices that don’t offer the financial return of homeownership.
According to GOBankingRates’ survey, nearly 27% of Gen Z women 18 to 24 are prioritizing saving for a house over any other financial goal. Gen Z makes up the largest age group saving for this financial goal with their older counterparts prioritizing other targets like paying off debt or saving for retirement.
Gen Z women have their sights on feeling established in a home. A recent survey conducted by Rocket Mortgage found that 35% of Gen Z women want to buy their first home in the next four years with their primary motivation being to grow a family. Additionally, 21% of young women are looking to attain residential stability.
Tips For Gen Z Homebuyers
Gen Z women should not feel like homeownership is an unattainable goal. While shifting from living with parents or renting to homeownership might seem daunting, it is a great springboard to bigger financial ventures.
Before assuming you are unqualified, or not financially prepared to buy a home, you might want to check out these tips for Gen Z homebuyers to increase your knowledge. Spoiler alert, it might not be as impossible as you think.
Gen Z women were born in the digital age, so what better way to find a home than by researching online? While this will show you some of the homes nearby that are for sale, it won’t show you all of them.
While it might sound odd, driving around the neighborhoods you are interested in moving to and looking for older homes with for-sale signs is a great way to find a low-cost for-sale home. Often older residents who are less tech-savvy are looking to sell their homes but aren’t as comfortable with house retail sites.
These residents often offer some of the lowest prices out there, and by simply taking on a few hours of house-hunting you can find a great deal.
Work On Your Credit Score
The benefit of buying a home as a Gen Zer is you likely have a limited credit history and little debt. These factors can help you have a good credit score, which will boost your chances of homebuying.
According to our survey, 44% of young women 18 to 24 don’t have student debt and another 25% have less than $10,000. This puts this generation of women in a good place when it comes to boosting their credit scores because the less debt you have, the better.
Having a good credit score is essential when it comes to buying a home. According to a recent study conducted by Fannie Mae, the average credit score for first-time homebuyers is 746. If your credit score is in this ballpark, you’re in good shape for a mortgage. If you’re not in this ballpark, the best way to boost your credit score is by paying your bills on time and paying off your credit card debts as quickly as possible.
3. Nearly Half of Gen Z Women’s Biggest Financial Worry Is Inflation
With Gen Z experiencing their first major price hikes as adults, they are feeling the pressure of everyday expenses being more costly than usual.
When we asked Gen Z women what their biggest source of financial worry was, inflation took the majority vote with 39% of 18- to 24-year-olds feeling the pressure of higher prices.
Gen Z women’s financial insecurity toward inflation is completely valid and it makes sense for them to be fearful of something they have never experienced before. However, this generation can rest assured that the rate of inflation will eventually slow down. In the meantime, here are some ways to combat the high costs.
Check On Your Subscriptions
It can be easy to forget about your subscriptions and not notice the $60 leaving your account every month to cover your Netflix, Amazon and gym memberships. While it might not seem like a lot to spend $10 on Netflix each month, stacking subscriptions adds up.
Take a step back and reflect on how often you use every subscription and whether it’s a need or a want. Be sure to eliminate any you aren’t using and consider rotating the ones you like every few months instead of subscribing to all of them every month.
Eliminate Spending Temptations
The key to helping your finances during a recession is to cut back everywhere you can in order to feel less financially stretched.
One way to cut back is to eliminate the temptation to spend. If your TikTok feed is full of clothing hauls, it might be time to delete the app or set strict app limits. If your email inbox is full of messages from shopping sites enticing you to spend then you should hit unsubscribe.
Don’t forget to also delete apps like UberEats and Doordash and opt to pick up your food in order to save on exorbitant delivery fees.
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Methodology: GOBankingRates surveyed 1,016 American women aged 18 and older from across the country on between February 17 and February 21, 2023, asking twenty different questions: (1) What is your primary financial goal?; (2) What is the biggest barrier to achieving your financial goal?; (3) If you are actively investing, what is your primary investment vehicle?; (4) If you are not actively investing, what’s preventing you from investing?; (5) What’s the biggest obstacle you’ve faced in your career path?; (6) How much student loan debt do you currently have?; (7) How much credit card debt do you currently have?; (8) What is your biggest obstacle to paying off your debts (credit card, student loan, medical, etc.)?; (9) What is your biggest source of financial worry/stress?; (10) What workplace benefit is most important to you?; (11) What is your worst money habit?; (12) How involved are you in household financial decisions compared to your partner?; (13) Which of the following financial professionals have you utilized? (Select all that apply)?; (14) Do you consider yourself financially secure/stable?; (15) What is your biggest financial regret?; (16) Do you consider yourself bad with money?; (17) If you are a parent, which cost are you most overwhelmed by?; (18) If you are a parent, what best describes your current work situation?; (19) How would you describe your relationship with money?; and (20) Do you consider yourself to be financially independent?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.