Generation Z, born between 1997 and 2012, has always had the internet. These digital natives grew up with technology and witnessed the emergence of the smartphone, e-reader, and Bluetooth from a young age. They rely more on their favorite apps, like YouTube and Reddit, than on traditional TV.
This generation is also familiar with economic challenges: the Great Recession of 2007-09 and the COVID-19 recession. In a March 2020 Pew Research Center survey, nearly half of young adults (ages 18 to 29 at the time, including the oldest Gen Zers and youngest millennials) reported job losses or pay cuts due to the pandemic. This was the highest share among any age group.
Today, many Gen Zers worry about having enough money and making financial mistakes. They also question the long-term financial benefits of college given its costs.
So, where do Gen Zers, who are at the crossroads of technology and economic uncertainty, turn for financial information?
There’s an App for That
Growing up with the internet, Gen Z has access to financial resources and platforms that earlier generations did not.
For example, my 20-year-old daughter has a daily budget widget on her smartphone. She can check it anytime to see how much she can spend that day. The app calculates a daily spending limit based on her part-time job income, recurring expenses, and saving goals.
Since her senior year of high school, her financial goals have included avoiding student loans after her freshman year of college, maintaining a cash reserve for busy school periods when she works less, and paying her credit card bill in full each month. She stays on track by using a banking app to schedule automatic transfers of 30% of her monthly pay to a linked savings account.
As a Gen Xer, my early financial plan involved three envelopes: one for saving, one for spending, and one for donating. Yes, Gen Zers are more tech-savvy.
Young Adults Turn to Social Media for Financial Guidance
With smartphones come apps and access to extensive financial advice on social media. This access is a big advantage for Gen Zers interested in budgeting, debt repayment, and investing, among other topics.
What financial advice do young adults see most on social media? A Forbes Advisor survey of over 1,000 millennials and Gen Zers in January 2023 highlighted these top five topics: investing in stocks and bonds (57%), personal budgeting (51%), passive income (49%), reducing debt (40%), and building or improving credit (37%).
In the same survey, 79% of respondents said they got their financial advice from social media. Other top sources were family (35%) and internet searches (33%).
Most Popular Social Media Platforms among Teens
With several social media channels available, where do American teens gather the most?
A 2023 Pew Research Center survey found YouTube ranked highest among 11 social media platforms for teen usage, at 93%, followed by TikTok (63%), Snapchat (60%), and Instagram (59%).
The same study showed that Facebook usage among teens dropped to 33% from 71% in Pew’s 2014-15 survey, when Facebook was the top platform. The share of teens who said they were online “almost constantly” also nearly doubled, rising to 46% from 24%.
Gen Zers Emerge as Young Investors
For older generations, the introduction to investing often came with a first job and a company retirement plan.
Research from the FINRA Investor Education Foundation and the CFA Institute shows a higher share of Gen Zers started investing before turning 18 compared to the two previous generations. A May 2023 report found that 56% of U.S. individuals aged 18 to 25 had at least some investments.
The ease of accessing financial information on social media and the rise of investing apps and cryptocurrencies were noted as low barriers to entry.
“The Gen Z population is diverse and digitally savvy,” said FINRA Foundation President Gerri Walsh upon the report’s release. “They are using mobile technology to enter the financial markets in unprecedented numbers and consulting a wide range of information sources as they do so.”
Common-Sense Practices for New Entrants
Whether looking to build good financial habits or start investing, Gen Zers—and people of any age—should keep some basic guidelines in mind when searching for financial tips. Here’s what I tell my own Gen Zer:
– Don’t trust what you don’t understand. Research and verify any advice before considering it.
– Do your homework on the people giving advice. Look beyond follower counts to check experience and credentials. Financial influencers, or “finfluencers,” may have few qualifications and may not always disclose conflicts of interest.
– Be aware of solicitations and scams on social media. A recent Federal Trade Commission report noted that 1 in 4 people who said they lost money to fraud since 2021 traced it back to social media. In the first half of 2023, 53% of the total money reported lost to social media fraud was from investment-related scams. Unlike licensed financial advisors, finfluencers are not covered under consumer protection laws, leaving little recourse to recover losses.
