Financial Habits of the New Workforce

Gen Z has immense potential to develop sensible financial habits. But to do this successfully, they must learn how to balance spending pleasures with saving for their future.

This new generation was raised seeing their parents struggle with credit card and student loan debt, giving rise to an acute desire for financial security and stability.

Proactive Approach

Gen Zers have witnessed their parents struggle through The Great Recession and as such are more inclined to be cautious and pragmatic when making financial decisions than previous generations. While this can have positive results for their finances, Gen Zers must still exercise caution when prioritizing spending or trying to avoid debt altogether. Having knowledge about budgeting and saving is crucial if they hope to attain long-term goals such as buying a house or paying off student debt in due time.

Gen Z has grown up surrounded by technology and should feel at home using mobile apps and online platforms to manage their finances, but Akeiva Ellis, a certified financial planner from JMG Wealth Management warns them about distinguishing trustworthy advice from amateurs or scammers on social media. Technology’s fast pace can be both positive and negative when it comes to information availability – fast technology may provide plenty of data but the faster rate could also present threats such as scammers.

Gen Zers are capable of making more informed decisions due to the ease and speed of information access, while older generations required more time and research efforts for making decisions. Yet too much screen time may cause feelings of isolation and underdeveloped social skills; therefore, Gen Zers must remain wary not to allow it overtake their efforts towards saving and responsible spending.

Gen Z is the largest, most diverse generation in U.S. history and must embrace financial literacy to secure their futures and flourish in the workforce. With national debt at record levels and retirement savings dwindling away, now more than ever it is essential that they take control of their finances by developing healthy money habits which can last throughout their lives.

Debt Management

Gen Zers may not possess the same financial acumen as millennials and Gen Xers, but they can learn from the mistakes their parents made. Additionally, having access to an abundance of financial information via the internet democratized information means they can research investments, savings strategies, etc. at their convenience.

Generation Z can use video-based financial education to expand their financial knowledge. YouTube hosts hundreds of expert videos that offer financial guidance and advice, some for free. However, Gen Z should balance self-education with professional advice when making financial decisions.

Gen Z can improve their financial health through budgeting and learning how to avoid debt. Some habits they can develop include using their debit card only for expenses related to work or living expenses, saving for unexpected expenses, and not overspending.

Young adults tend to put less focus on saving for retirement or paying taxes than on building emergency funds and planning for major life changes. Although some events may require borrowing money, young adults can take steps to make smart loans through following advice from financial experts such as Dave Ramsey or George Kamel.

Investing

Gen Z’s financial goals are lofty and they want to gain as much knowledge about personal finance as they can. Many have seen their parents struggle financially and now take a more fiscally conservative approach when it comes to money matters – prioritizing spending control, debt management and saving while appreciating accounts and services that facilitate this like debit cards and mobile banking accounts and services.

Gen Z may seem confident, but there’s still much they have to learn. According to Investopedia’s 2022 Financial Literacy Survey, nearly half of Gen Z adults already invested, and 26% put their money in the stock market – yet only one-fourth felt comfortable enough explaining it to someone else. They also have more to learn when it comes to paying taxes, saving and spending habits, borrowing/managing debt as well as credit scores and overall debt management.

Financial firms need to stop misjudging this generation as “coddled” or unwilling to mature; rather, it is time for financial firms to recognize their unique challenges and opportunities. Welcoming Gen Z into investment can set them up for success while simultaneously forging relationships that could last a lifetime. Gen Z investors will soon represent a large segment of investors; therefore it’s essential we support their thirst for knowledge and financial security in the years to come.

Budgeting

Gen Zers have observed the struggles of their millennial parents regarding student debt and housing costs, so have taken a more conservative approach to money matters. They prefer accounts that help avoid debt while using debit cards instead of credit cards for spending.

Gen Z has much easier access to financial advice and guidance than older generations; however, most rely on parents and family for this knowledge rather than digital sources like Google or personal finance influencers.

Gen Zers may have some financial awareness, yet still hold misconceptions when it comes to building credit and saving for retirement. According to a NerdWallet survey, 26% of Gen Zers don’t think young adults need to worry about building their credit and 28% do not see saving as important for future stability.

Misconceptions may arise from personal experience; nonetheless, Gen Zers generally desire to improve their financial habits. They understand the significance of credit scores, savings and investing; however, they need guidance in how best to apply this knowledge into practice. Furthermore, no matter their current circumstance may be, they know they have power within themselves to create positive change; starting with budgeting.