According to a study by the Pew Research Center, Gen Z – those born after 1996 – will be the most diverse and well-educated generation yet. They also may be the most anxious, as more than two in five Gen Zers feel anxious about their finances.
Why is Gen Z anxious about their finances?
Gen Z has been influenced by a few major historical markers that could be contributors to their anxiety about finances. One of which is the growth and widespread use of technology and social media, which has exposed Gen Zers to a widespread display of luxury on social media. Another influence is the great recession’s impact on the millennial generation and the financial stress Gen Zers witnessed millennials experience.
Additionally, college tuition costs continue to rise, leaving many thinking about getting into debt at a young age. Most of all, many Gen Zers may be anxious about joining the workforce in the current environment, which has become more volatile since the start of the COVID-19 pandemic.
What should Gen Z do to best prepare for their financial future?
There are several steps older members of Gen Z can take to better prepare for their financial future, and they should consider focusing on three major areas: utilizing online tools, building credit responsibly and investing.
Utilizing online tools
With Gen Z’s familiarity with online tools, there are endless platforms to use to learn about finances and to track spending. A few online strategies that can be implemented right away include:
- Signing up for online and mobile banking to regularly track spending
- Enabling transaction notifications on cards to closely watch for suspicious activity as funds leave your account
- Signing up for free budgeting apps
- Subscribing to financial education blogs
- Utilizing financial calculators to track net worth and more
- Closely watching news outlets that report on the economy
While Gen Zers should turn to easily accessible online tools to manage their finances day-to-day, don’t forget there are bankers ready to answer your questions too. Don’t hesitate to introduce yourself at your local branch and build a relationship with a banker who can give you one-on-one guidance on your unique situation.
Building credit responsibly
However, it’s important Gen Zers learn how to use credit responsibly rather than avoid it entirely. This means Gen Z should learn early on what it means to have healthy credit, how to build good credit and to only open lines of credit they can responsibly manage.
Everyone, including Gen Zers, should request a credit report at least once a year to check for suspicious or harmful activity. Learn more about managing credit by reading the following articles: What is a Good Credit Score and The Difference Between Having No Credit Score and Having a Bad Credit Score.
Beginning to invest
Some studies suggest Gen Z will soon have the most economic buying power and even their income will surpass millennials’ income by 2031 when the oldest members reach their mid-30s. Gen Z’s rising income and the fact that they have time on their side are two important reasons to begin investing as soon as possible, even if it means starting with a small amount.
There are many different ways to invest, and one of the most popular ways individuals first begin investing is through employer-sponsored retirement plans, such as 401(k)s. However, you may begin investing before your first full-time job by opening a brokerage account or other investment account. Remember, starting early with a small amount is better than not starting until later in life.
The steps each Gen Zer can take now to better prepare for their financial future depend on their age now, considering the younger end of the generation may not be quite old enough to open their own first accounts yet while the older end is already entering the workforce. However, these are all general tips to keep in mind as you either work with your young Gen Z children to establish good financial habits early or you work as an older Gen Z member to reduce anxiety about the future and build a healthy foundation for success.