Search

K8, Generation Z Unfiltered- #5

Updated: Jan 19

Gen Z: Are we as “Financially Doomed” as Millennials?

By: Kiran Johnson and Rosario Picone


Each generation uniquely shapes our economy. Different consumer habits forge new paths for our economy. They open up new markets and drive people to spend money in alternative ways. This can be partially attributed to the different times and changes in society, and society’s expectations for people. The newest trend among Baby Boomers and Gen X is loving to hate Millennials and their spending habits. Millennials renting houses? Sacrilege they say! Millennials leasing cars? A financial disaster they scream! But how does Generation Z’s spending and saving habits stack up against their older siblings?

First, a breakdown of current generation’s financial state: Generation X’s median income is around 85K, truly impressive numbers, and far more than their Baby Boomer parents. Millennials, and young people in general, are often criticized by Boomers and Gen X for their inability to save any money and careless spending habits. Millennials are certainly not struggling as much as we thought: they aren’t far behind their parents in terms of income. The median income for Millennials is around 70K despite being only 25-35 which puts them ahead of their parents, and 1 in 6 have over 100K in savings so far (Bank of America). This data conveys a far different narrative that is suggested by older generations. It looks like Millennials aren’t as “financially doomed” as we initially thought.


Regarding future debt and retirement, Gen Z has some large shoes to fill. Millennials began saving for retirement at 24, which means that at 24 they had a firm understanding of banking and investment strategies. Generation X started much later at the median age of 30 and Baby boomers started even later at 35 (Transamerica Center for Retirement Studies). Following the same trend, Generation Z should begin saving for retirement before millennials, but from my perspective, I am not confident that we will. My generation appears to have little interest in retirement, and our focus on entrepreneurship will make that a real possibility. Boomers and Gen X had strongly established careers, often staying in a position and field for long periods of time. Millennials have already been observed bouncing around between opportunities, which is not necessarily bad, just a different process from previous generations. Gen Z is already focused around entrepreneurship, and that essentially allows them to work forever. If they get laid-off, fired, or bored, they can start their own venture. It essentially provides an opportunity to never need to retire.ess and finance.


Boomers and Generation X much prefer to save up for big purchases in the name of building equity, and are quick to criticize Millennials for their small purchases. Our survey also found that Gen Z follows Millennials, and prefer to spend a little amount of money many times rather than fewer large purchases. When it comes to what Gen Z actually spent money on, our results showed a clear trend; Gen Z loves food and clothes. However, the sample we surveyed lives in or near to a city, whereas results may have been different if we’d surveyed rural areas as well. This variable suggests there is a cosmopolitan bias in our results. Three out of five of our responses listed both food and clothes as what they spend money on the most, but they very rarely spend over twenty dollars in one place even though they make multiple purchases. When it came to how often big purchases were made, those where one item is over $100, all of the answers were almost never. Our sample mostly included members of Gen Z in the middle class, so $100 is a relatively large amount of money. However, spending $100 is less unusual for members of the middle class than it would be for members of lower classes. While it may appear that Gen Z is spending a fair amount of money on worthless items, they very rarely spend a large amount of money in one place. They spread their spending out over time and multiple purchases, but their spending is acceptable compared to how much they have saved.


Generation Z is young, yet has already pointed in a clear direction as to where their values are placed. They purchase what they need- food and clothes- in small amounts, demonstrating responsible spending habits. However, Gen Z is prone to impulse buying, which is inferred from the majority of their purchases being $20 or under, and the fact that they don’t spend a lot of money in one place. With commerce shifting to become more and more virtual, it would seem that Gen Z is very susceptible to spending a lot of money online. Pop-up ads and being easily sidetracked may contribute to this. This will change as Gen Z grows older and takes more financial responsibility for their lives. They will learn to prioritize spending, more than they already have, on their needs. Due to their high interest in entrepreneurship, they may have the opportunity to work for the rest of their lives; which will be needed to pay their student loans. With valuable experience gained in business and finance, at a young age, they will be better equipped on how to mindfully spend and save money in their futures. ly provides an opportunity to never need to retire.


When it comes to past generations managing their money, Baby Boomers are doing the best job of staying debt-free, with 22% reporting they have no debt, compared to 15% of Millennials and 14% of Gen Xers. Younger generations, such as Millennials and Gen X have been observed taking on massive amounts of student debt, and unfortunately this does not look like a trend that will change any time soon. Where Generation Z will become trapped is student loans. More of Gen Z than any other generation will be attending college- and college is not getting any cheaper. With very little help available to navigate the options of college, all we can hope for is our parents and older siblings stepping in to correct the mistakes we already made.


Generation Z is young, yet has already pointed in a clear direction as to where their values are placed. They purchase what they need- food and clothes- in small amounts, demonstrating responsible spending habits. However, Gen Z is prone to impulse buying, which is inferred from the majority of their purchases being $20 or under, and the fact that they don’t spend a lot of money in one place. With commerce shifting to become more and more virtual, it would seem that Gen Z is very susceptible to spending a lot of money online. Pop-up ads and being easily side tracked may contribute to this. This will change as Gen Z grows older and takes more financial responsibility of their lives. They will learn to prioritize spending, more than they already have, on their needs. Due to their high interest in entrepreneurship, they may have the opportunity to work the rest of their lives; which will be needed to pay their student loans. With valuable experience gained in business and finance, at a young age, they will be better equipped on how to mindfully spend and save money in their futures.


Generation Z is still young and has a lot to learn about spending and saving. Their habits will continue to change, especially as they gain more financial responsibility. Saving is a vital part of living comfortably, economically, so Gen Z will have to curb their habit of impulse buying. Overall, Gen Z’s future looks bright, as they’ve gained experience in business and finance at a young age, which will hopefully go towards successfully continuing to mold our economy, throughout their lives.


Generation Z is still young and has a lot to learn about spending and saving. Their habits will continue to change, especially as they gain more financial responsibility. Saving is a vital part to living comfortably, economically, so Gen Z will have to curb their habit of impulse buying. Overall, Gen Z’s future looks bright, as they’ve gained experience in business and finance at a young age, which will hopefully go towards successfully continuing to mold our economy, throughout their lives.


https://markets.businessinsider.com/news/stocks/united-states-gen-z-demographic-patterns-and-spending-trends-2018-gen-z-young-adults-generate-an-aggregate-income-of-463-billion-while-older-teens-have-an-aggregate-income-of-17-billion-1027494073

http://money.com/money/5640466/this-chart-shows-how-much-millennials-gen-x-and-baby-boomers-have-saved-for-retirement-see-how-you-compare/


0 views