Gen Z, the youngest group in today’s workforce, is already making a significant impact on the financial world. Born between 1997 and 2012, this generation is known for its digital proficiency, entrepreneurial mindset, and distinct approach to handling money. Unlike older generations, Gen Z has grown up surrounded by technology, which has influenced their attitudes and behaviors toward managing money and building wealth.
To better understand Gen Z’s financial habits, attitudes toward money, and strategies for building wealth, we conducted a survey of 1,000 Gen Z individuals aged 16 to 25 living in the U.S. The findings show that this generation is financially aware and proactive in creating wealth. Below, we present a summary of the survey results along with additional data from reliable sources.
Gen Z and the Financial Environment
Gen Z has witnessed the financial struggles of their parents and older siblings, growing up in the aftermath of the Great Recession. They have observed rising interest rates, soaring housing prices, and economic uncertainty. Despite these challenges, Gen Z is carving its own path.
Our survey data shows that over 50% of Gen Zers have a mix of debt and savings or carry debt without savings. However, they manage their finances by paying bills on time and covering essential expenses like groceries and necessities.
Among them, about 30% can pay their bills but lack savings, indicating a need to develop new saving strategies to build a financial cushion for the future.
On the bright side, around 10% are debt-free and have savings, showing the potential for financial independence.
What is Gen Z’s Average Income?
Many Gen Zers are just starting their careers or still pursuing their education, with an average annual income of $32,500. Although this may seem low compared to more established generations, their income is expected to grow as they progress in their careers.
But income alone isn’t the full story. Gen Z is already thinking ahead about how to manage their money. They are budgeting, saving, and planning for their financial futures, laying a strong foundation for wealth growth as their income increases.
Gen Z is also looking beyond traditional jobs for income. Many are pursuing side hustles and entrepreneurship, enabling them to establish multiple income streams and gain valuable experience in money management and business. This positions them well for increasing their wealth over time.
How Gen Z Manages Their Money
As Gen Z is still early in their financial journey, their net worth is generally lower than that of older generations. However, their proactive money management habits and focus on wealth-building show their determination to improve their financial standing over time.
Gen Z’s approach to money management is a blend of caution and foresight. Here’s a summary of how they handle their finances based on our survey results:
– Checking and Savings Accounts: Gen Z shows a thoughtful approach to managing money, with a focus on maintaining checking and savings accounts to support their financial goals.
Gen Z and Credit Cards
Gen Z’s money management reflects a cautious attitude toward credit. About 21% of Gen Zers do not have credit cards, possibly due to a preference for cash transactions or concerns about credit card debt.
On the other hand, around 25% of Gen Zers have three or more credit cards, indicating a level of comfort with credit and a strategic use of it. They may be using credit cards to start building credit and work toward future goals like buying a house.
Many Gen Zers actively monitor their credit scores, with a significant portion having scores in the fair-to-good range. This is promising, especially for those still establishing their credit history.
However, 19% of Gen Zers are unaware of their credit scores, highlighting the need for more financial education. Understanding how to build credit is crucial for securing loans, renting apartments, and even improving job prospects, as many employers check credit during the hiring process.
Gen Z’s approach to credit cards and credit scores showcases a cautious yet strategic financial mindset. Based on the responses we collected, Gen Z is shaping its financial future by managing credit responsibly and being mindful of credit scores.
When it comes to credit card preferences, Gen Zers are most interested in cards that offer practical benefits and minimize costs. They favor cash-back cards, no-annual-fee cards, and student credit cards, reflecting a practical approach to credit card use with a focus on maximizing rewards from everyday transactions and minimizing costs.
Does Gen Z Carry Debt?
Debt is a reality for many Gen Zers, but the extent varies. According to our survey, 41% of Gen Zers have less than $2,000 in total debt or no debt at all. Another 40% carry debt ranging from $5,000 to $25,000. Additionally, 8% have debt between $25,000 and $50,000, while 5% have more than $50,000 in debt. About 6% of Gen Zers were unsure of their exact debt amounts.
Within the 41% with $2,000 or less in debt, 20% are completely debt-free, suggesting that a significant portion of Gen Z is setting themselves up for a strong financial future.
Despite facing various forms of debt, it appears that some Gen Zers are making efforts to keep their debt levels manageable.
How Gen Z Builds Wealth
For Gen Z, building wealth is not just an idea; it’s a priority. Our survey shows that 62% of Gen Zers consider wealth-building very important, while only 3% see it as unimportant. Financial security and planning are clear priorities for this generation.
Gen Z’s wealth-building strategies include saving, investing, and diversifying their income sources. Nearly half (47%) of Gen Zers maintain a budget and closely track their expenses, while 34% rely on memory to monitor their finances.
Interestingly, 17% of Gen Zers have a financial advisor helping them manage their money. Gen Z’s proactive approach to wealth-building is a promising step toward financial freedom.
How Much Wealth Does Gen Z Have?
Despite their age, many Gen Zers have already started saving:
– About 1 in 5 Gen Zers have no savings, but 42% have managed to save at least $1,000. They are actively working toward building their savings.
– 4% of Gen Zers have accumulated more than $50,000 in savings, demonstrating impressive financial progress at a young age. Additionally, 1 in 4 Gen Zers have saved over $10,000.
– When it comes to savings, 46% of Gen Zers save $100 or less per month. Among them, 28% save between $1 and $100 per month, 18% are not saving at all, and 19% save up to $250. At the higher end, 35% save more than $250 per month, with 7% saving more than $1,000.
There is a lot of variation among Gen Zers. Some are still in the early stages of their financial journey, while others have made significant strides toward accumulating wealth. This diversity reflects the different income sources, financial strategies, and personal circumstances among people in this generation.
Gen Z and Investing
Let’s explore how Gen Z approaches investing based on our survey findings:
– No Investments: A significant 37% of Gen Zers do not have any investments, including traditional stocks, commodities, index funds, treasuries, CDs, real estate, or cryptocurrency.
– Traditional Stocks: Only 22% of Gen Zers invest in traditional stocks, making it the most common investment option among them.
– Investment Platforms: Interestingly, 38% of Gen Zers do not use standard investment platforms like Fidelity, Robinhood, Vanguard, or TD Ameritrade. Instead, 22% use cryptocurrency exchanges like Coinbase, Kraken, or Binance.
– Investment Priorities: For those Gen Zers who do invest, factors like potential return on investment (49%), risk level (50%), fees and expenses (51%), and reputation (48%) are very important. However, factors such as available liquidity (43%), the investment’s environmental impact (39%), and the choices available (41%) are considered less important.
Learning by Example
Everyone makes financial mistakes, and Gen Z is no exception. However, this generation seems to learn from the mistakes they and others have made.
Here are some key takeaways from our survey on Gen Z’s financial experiences:
Top Financial Mistakes Made by Gen Z:
– Low-paying jobs (46%)
– Unexpected expenses or emergencies (38%)
– Difficulty finding jobs (34%)
Sources of Wealth-Building Advice for Gen Z:
– Diversified Financial Advice: Gen Z values a variety of financial advice sources, including social media, literature from financial experts, and real-life examples.
– Financial Tools: Gen Z actively seeks financial tools to correct their financial mistakes and build credit. They are interested in budgeting, saving for emergencies, and making informed investment decisions.
These insights demonstrate that Gen Zers are committed to learning about financial literacy and money management and seeking reliable resources for guidance.
Salaries vs. Side Gigs
When it comes to building wealth, our survey shows that Gen Z tackles the challenge with diverse strategies:
– Side Gigs (46%): Gen Z recognizes the value of additional income streams, whether through passion projects, leveraging skills, or exploring entrepreneurship. Side hustles provide financial flexibility and the opportunity to increase income, despite the challenge of balancing work and personal time.
– Earning a Salary or Starting a Business (40%): Gen Z understands the importance of securing a stable salary or venturing into entrepreneurship to build a strong financial foundation. This approach enables them to cover expenses, invest in their future, and work toward financial security.
– Saving (65%): While facing constraints, many Gen Zers prioritize saving. They understand that even small increments contribute to creating a financial safety net, supporting future goals, and preparing
