It’s no secret Millennial and Gen Z consumers have faced their fair share of adversity from financial crises as they matured from adolescence into adulthood.
And while every generation faces financial setbacks, these adverse events have had a profound impact on these younger Americans, affecting their habits and leaving some common goals feeling out of reach, according to a new study from WSFS Bank of 2,005 Americans between ages 18-40.
Of those polled, 65% describe their overall financial situation as either “good” or “excellent,” while 53% of African American respondents agreed.
African American respondents were more likely to see their financial goals as achievable in the future, with 75% saying they were optimistic they’ll achieve their goals compared to 58% of total respondents.
Despite this positive outlook, 43% said they frequently have trouble paying everyday living expenses, with 19% saying it happens to them “constantly.”
Financial Literacy Gaps
When it comes to financial literacy, 61% of respondents agreed that most of what they’ve learned about finance was through osmosis, with 75% of men agreeing compared to 49% of women.
However, on where they learned financial lessons, parents topped the list of sources at 36%, with African American respondents (52%) more likely to agree they learned from their parents. But only 23% of total respondents said they learned financial skills in school, making it clear a financial literacy gap exists.
The lack of financial education has left many of these younger consumers struggling with money management, including 87% who said they’re not good at putting money into savings. As a result, many common monetary goals such as saving for retirement (38%) and buying a home (37%) feel out of reach for these generations.
It’s never too late for any generation to prioritize money management to build financial stability, however, and there is an abundance of educational content online to help bridge these gaps and build your financial confidence – from articles and books to interactive tools.
Living Through Major Financial Events
Compounding the feeling of being on their own to figure it out when it comes to financial matters, Millennials and Gen Z have lived through multiple recessions and other major financial events during late adolescence and early adulthood, and these events have helped shape their behavior and attitudes toward money.
Forty percent of respondents stated the 2015 mini-recession had a huge impact on their financial behavior, while 38% cited the Occupy Wall Street movement and 31% mentioned the current COVID-19 crisis.
These events have left respondents anxious when it comes to experiencing setbacks, with 48% worried about losing a job/taking a pay cut, 44% worried about filing for bankruptcy and 40% worried about making bad financial decisions.
While overspending is often the first thing that pops into consumers’ minds when they think of financial troubles, financial stagnation has played just as large a role in recent years for these generations, leaving salaries flat and jobs difficult to come by at times.
Resilient and Adaptable
Perhaps as a result of living through so many crises, Millennials and Gen Z have proven to be resilient and adaptable in the face of adversity, including during COVID-19.
Only 10% of total respondents said the pandemic has negatively impacted their finances overall, likely due to their adaptable money habits, and African American respondents (40%) were more likely to be putting more into savings since the start of the pandemic than total respondents (35%).
While these generations remain optimistic about their financial situations, it is clear financial literacy gaps exist and more must be done to educate children about money at an early age.
With the help of more solid financial education early in life from schools, parents and financial institutions, we can better prepare future generations for the money management challenges they may face and instill a sense of financial confidence when it comes to achieving financial goals.
Helping you boost your financial intelligence.
Read our financial resources from your friends at WSFS.