Gen Z, the generation born from the late 1990s to early 2010s, is believed to be inheriting a solid economy and record-low employment. They are also on track to become the most educated generation. With this, even from a financial standpoint, we can learn a lot from Gen Z.
They may be young, but that does not mean they know less than the older generations. There is a lot that they can teach others about personal finance, including those we’ll be talking about in this short article.
9 Lessons About Personal Finance from Gen Z
We are constantly looking for ways to improve our finances. If you need tips, you can learn a lot from Gen Z. Even if they are not as experienced as the generations before them, they are well-educated, so we can surely pick a thing or two from this generation.
1. Use Social Media
In one study, up to 91% of the Gen Z respondents noted that they use social media when researching investments. They use such platforms more than any other source. Among others, YouTube takes the top spot as their favorite platform for financial information. TikTok, Reddit, Facebook, and Twitter were also main sources of financial information for Gen Z.
These platforms engagingly present information. They are bite-sized, so they are easy to comprehend, especially for people who have a short attention span.
Nonetheless, you must observe caution. One of the biggest problems is the inaccuracy of information on social media. One must be conscientious, doing religious research to verify the veracity of information posted on social media accounts. More so, you should only follow those who have built a solid reputation for your peace of mind.
2. Work on Your Credit Score
Half of credit-active Gen Z consumers have a prime and above credit score. This is a higher number compared to millennials who were respondents in a TransUnion study. It shows that even if Gen Z is a young cohort, they have good credit scores that will make them qualify for the top credit cards and reasonable interest rates.
Millennials are often held back by their poor credit scores. This means that they are often rejected when applying for credit cards, loans, and mortgages. On the other hand, Gen Z is more credit-active and perceived as more credit-worthy, which is also probably because they are more financially educated than millennials and other population groups. Although, baby boomers and the silent generation are the ones with the highest average credit score.
Do you have a bad credit score? While such can be frustrating, do not let it dampen your spirit. Creditninja.com offers poor credit loans. This way, you can have the financial support that you need despite your not-so-stellar credit standing.
3. Take Advantage of Digital Technology
Technology is taking over almost every facet of our life, and such is highly evident in the Gen Z population. Compared to millennials, baby boomers, and the silent generation, Gen Z is the most active cohort in the use of digital technologies, including smartphones, laptops, and tablets.
So, if you are not yet using your gadgets to manage your finances, you are probably missing out on a lot. For instance, it is convenient. Rather than going to the bank, you can perform many transactions using digital tools. It can even be utilized for applying for financial products and services, such as credit cards and loans.
Speaking of digital technologies, the Gen Z population also expects that artificial intelligence will have a positive impact on their lives. With such, financial service providers should consider how to utilize the power of AI to improve their services and reach more customers.
4. Explore New Opportunities
While it is good to be on the safe side, it also pays to be brave. One of the fundamental rules of finance is that the higher the risk, the higher the return. With this, one more thing that we can learn from Gen Z is that we should not be afraid to try new things, such as when investing. Nonetheless, you should do so with caution, making sure that you calculate the risks.
Gen Z, together with millennials, are driving their capital to new platforms and frontiers with new priorities. They have the appetite to discover something new instead of being stuck with the traditional.
5. Do Your Research
Even if Gen Z uses social media a lot, including for personal finances, it does not mean that they are lazy. They might find something from TikTok or YouTube, but they do not instantly believe in everything they see. Most of the time, they are willing to go the extra mile to research before making a decision.
Many of us are too preoccupied with work and many other things. Often, we do not have enough time to delve deep before reaching a financial decision. However, like Gen Z, we should be proactive in conducting our research for making well-informed choices. From choosing the stocks to buy to evaluating the best credit cards, thorough research is a must.
6. Do Not Immediately Hire a Professional
It is common for older people to rely on professional finance advising. They have the money, so they do not mind paying an expert in exchange for their opinion. This can be helpful when you are diversifying your portfolio, looking for new investments, or making major financial decisions.
Gen Z is a self-reliant generation. As mentioned earlier, they do thorough research. One thing that we can learn from them is that we should exert more effort in doing our research. We can save money by doing things on our own.
7. Judicious Approach to Using Money
While it might seem that the Gen Z generation is all about fun, they are judicious when it comes to money. They are conservative in financial matters. Many of them grew up listening to cautionary tales and financial nightmares of the older generations, so they are more cautious.
Money is one of the most common sources of stress in Gen Z. It is often on the list of things that freak them out. This fear is a good thing for them because it is what makes them vigilant in their personal financial management. They won’t just go with the flow. Instead, they will take their time and do their research, so they will know where it is best to put their money.
8. Debt Hesitancy
Debt is good if you know how to manage your finances well. For many, however, debt turns into a burden. This is especially the case when interests start to accumulate. One thing that is common in the Gen Z cohort is that they have no or low debts, which are often under control. They are intelligent when it comes to money matters, so debt does not consume them.
Because Gen Z has grown in an era of an economic downturn, they are often cautious. This is also why they do their research and are judicious in money, as earlier mentioned. They want to save as much money as possible while avoiding debt if they can. They know how to live within their means, which is also the reason why many of them do not have debts.
9. Willingness to Work Hard
Being young is often associated with a carefree spirit, often failing to plan for the future. Nonetheless, the Gen Z population is proving that such an assumption is wrong. Many of them have seen their Gen X parents suffer during the Great Recession. With this, they are looking for stability and security. They are working hard to have a stable income.
More so, it is also common for Gen Z to make extra income through part-time work and gigs. They earn extra money through freelance jobs. To add, many of them are already starting their businesses. It should be pointed out, however, that they are a young generation. Many of them do not have families yet. They have a lot more time at their disposal, so it is unsurprising that they can take extra jobs to increase their earnings.
In ten years, they are also expected to beat the incomes of millennials. Their economic power is also the fastest growing amongst all cohorts. With such, it is about time that we look at their attitudes towards personal finance and learn a thing or two.
Among others, one of the biggest lessons they can impart to other generations is the use of social media and digital technologies for financial literacy, as well as for financial services. More so, they are brave souls, knowing how to take advantage of new opportunities. Despite such, they are careful, making sure to conduct thorough research when making financial decisions.