Will Gen Z Out-Earn Their Parents? Here’s What Experts Say

Young Generation Z couple planning their investments and savings stock photo
NoSystem images / iStock.com

Every generation believes they have faced the toughest financial challenges, but for Gen Zers, the road has been especially rocky. From a global pandemic to soaring housing, healthcare and education costs, this generation has encountered unique financial hurdles. Yet, this generation holds the potential to out-earn their parents.

While it might seem impossible for the youngest generation in the workforce to out-earn their parents, YouTuber and CFP Josh Olfert believes that Gen Z might become the richest generation ever. Olfert points out that despite millennials making more and having more financial assets, they are also burdened by significant debt, particularly student loans. In contrast, Gen Z enjoys a higher standard of living and is decentralizing the workplace by leveraging several sources of income.

Now, the million-dollar question looms: Can Gen Z out-earn their parents financially, as Olfert envisions? Let’s delve into the differences between Gen Z and their parents in the financial landscape — and whether young Americans have any hope for out-earning their parents.

Gen Z Isn’t Interested in the 9-to-5 Grind

Gen Z isn’t tethered to the 9-to-5 grind. Instead, they juggle multiple jobs and income streams, forging their own work landscape and decentralizing the traditional workplace. Whether it’s freelancing, online businesses or cryptocurrency investments, Gen Z is displaying economic flexibility.

“The ability to work remotely can present an opportunity for Gen Z workers who are able to work high-paying jobs and also move to areas with a lower cost of living,” said Patrick Marcinko, CFP and associate financial advisor at Bogart Wealth. “The gig economy has been a way for Gen Z to add to their income beyond what they are able to earn from their 9-to-5 job. The ability to have multiple sources of income is much greater for Gen Z, compared to prior generations.”

Make Your Money Work Better for You

By juggling multiple streams of income, this generation is able to increase their income by having the workplace flexibility of living somewhere more affordable while maintaining a high-paying job, thus, setting aside more money for financial goals.

Gen Zers Are Impulse Spenders

Growing up in the digital age has exposed Gen Zers to relentless personalized ads and the constant pressure to spend money whenever they use their phones or computers.

“Unlike their parents, Gen Z has grown up in an era of instant gratification and constant access to information and entertainment,” said Tammy Trenta, CFP and CEO at Family Financial. “This has resulted in some challenges in terms of financial discipline, as they are often tempted by impulsive spending and a desire to keep up with trends.”

While older generations aren’t immune to advertisements for the latest iPhone, Gen X typically demonstrates stronger impulse control and researches products thoroughly before buying. To prevent poor spending habits from risking Gen Z’s financial future, it’s best for young Americans to budget and monitor their spending.

Gen Z Leverages Technology for Smart Financial Decisions

Growing up in the era of the iPhone has enabled Gen Z to use their digital skills for unconventional income generation and employ social media platforms to earn income from the comfort of their own bedroom as influencers or business owners.

“Gen Z also possesses unique advantages and strengths when it comes to financial discipline,” Trenta said. “They are adept at researching and leveraging technology to make informed financial decisions. They are more financially literate compared to previous generations at their age and are generally more open to seeking advice and guidance.”

Make Your Money Work Better for You

Gen Z’s financial determination and savvy have helped them start earning money early and are putting them on the path to out-earning their parents.

In fact, according to Statista, in 2020, 34% of Gen Zers aged 18 to 24 were influencers, highlighting the significant portion of young Americans who are leveraging technology and social media to generate income.

Gen Z Isn’t Prioritizing Children

Gen Z values independence and personal goals, and it’s no surprise that this generation isn’t placing the same emphasis on having children as their parents.

“Another big distinction is Gen Z’s perspective on having children, which can significantly affect one’s finances,” Trenta said. “It is vastly different from previous generations, influenced in part by social, economic and environmental factors. Many in this generation are putting off having children, partly due to economic pressures but also due to changing social norms around the value of personal independence and self-realization.”

Children are costly, and postponing having children — or not having them altogether — allows Gen Zers to focus on their financial security and earning potential.

Young Americans Are Likely To Surpass Their Parents’ Income

While both generations have faced undeniable challenges and will continue to do so, their income potential puts them in an idyllic situation to surpass their parents, according to financial experts.

“Gen Z has the potential to surpass their parents in terms of income and wealth,” Trenta said. “They are intrinsically entrepreneurial, resourceful, technology-savvy and rather unafraid to navigate uncharted territories — facets that could put them in a favorable position to out-earn their parents.”

Ultimately, only time will tell whether young Americans will indeed surpass their parents’ earnings, and it’ll be up to this generation’s saving, spending and investment strategies.

Make Your Money Work Better for You

More From GOBankingRates


See Today's Best
Banking Offers