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How Gen Z Is Stepping Into Financial Independence

Recent financial literacy surveys have found that Generation Z adults (people aged 18-25) are more financially educated than any previous generation. Today, over half of Gen Z already invests in some form. 26% of those who are invested put their money into the stock market.

But this doesn’t mean there isn’t more for Gen Z to learn. Of the group that invests in the stock market, only 1 in 4 thinks they could explain how it works to a friend. The financial concepts most familiar to Gen Z are how spending and saving work.

The key takeaway is that Gen Z knows a lot about finance, but they lack education depth. By addressing educational gaps, Gen Z, and anyone else, can boost their understanding of finance and secure their way towards financial independence.

How Gen Z is stepping into financial independence

Gen Z is a series of juxtapositions when it comes to finances. Most of them are off to a good start, but others face shortfalls in their financial understanding. Importantly, many Gen Zers know that they need to learn more. But many who understand basic principles are intimidated by more complex and sophisticated investing principles. Finally, Gen Z is one of the most well-educated generations. Unfortunately, they are also saddled with huge amounts of student loan debt to get by while studying.

Finding their financial footing

As Gen Z enters the workforce, a recent survey by Investopedia polling 4,000 U.S. adults looked at the financial knowledge of various generations. Just under half of Gen Zers feel confident about their financial literacy. Gen Z has the lowest confidence in financial knowledge among Gen Zers, Millennials, Gen Xers, and Baby Boomers.

Lowest Financial Confidence in Generations

It’s perhaps surprising that Gen Z has such low confidence in their financial literacy despite how much information is available today. Whether it’s in the classroom or online via platforms like TikTok and Instagram, Gen Z has a seemingly endless stream of knowledge at its fingertips.

But a recent survey conducted by Greenlight Financial Technology found that while members of Gen Z have a strong interest in personal finance, they also desire more financial education and subsequently lack the confidence to properly handle their finances.

Spending and saving, which seems to be Gen Z’s strong points, have been attributed to them watching their parents struggle, particularly throughout the Great Recession.

All In on Investing

Even if they aren’t totally confident, Gen Z is big on investing. 54% of Gen Z holds investments of some kind, whether stocks, cryptocurrency, or non-fungible tokens (NFTs).

Importantly, investing occurs across a wide range of demographics within Gen Z. 48% of Gen Z women hold investments, with the number being higher for Gen Z men (60%).

An area that does divide Gen Zers is income. Of those that earn less than $50,000 a year, only 45% are investing. By comparison, 73% of those making more than $50,000 have put their money into financial instruments.

Like Millennials, the most popular areas of investing for Gen Z are new financial technologies, like crypto.

1/4 Gen Z, Millennials and Gen X Use Crypto

Crypto has become an increasingly popular investing tool as younger generations become skeptical of traditional investing. Some of their concerns revolve around how the government always seems to just print more money whenever the economy cools down. Both Gen Z and Millennials invest in crypto and stocks at similar rates, with around 1 in 4 investing in crypto.

Men tend to own cryptocurrencies and NFTs at nearly double the rate of women. However, these financial instruments can be particularly vulnerable to fluctuations. One way to prevent taking on too much risk can be to spread out the purchase of your assets into other more stable and reliable investments.

Social Media Powered Learning

Gen Z relies on technology to stay educated. YouTube and other videos are the preferred learning methods; only teachers rank higher as a source of learning.

Millennials, the generation closest to Gen Z, have similar habits, with internet searches being their top method for learning about financial information. Unlike Millennials, Gen Z also utilizes TikTok at a huge rate to get more financial information.

Importantly across generations, friends/family were the number two source of financial information. The only generation that departed were Boomers, who considered friends/family their number one source of finance-related information.

However, there are still gaps in Gen Z’s financial knowledge. Gen Z tends to struggle when it comes to credit and debt management. Understanding your credit score is important, particularly when it comes to how your credit score impacts car insurance and other areas.

Gaps Become Concerns

According to surveys, Gen Z is particularly worried about paying their taxes. In fact, paying taxes, managing debt, and borrowing money are the biggest areas of concern for Gen Z. During the pandemic, Gen Z faced huge struggles—39% said they lost their jobs, were furloughed, or faced a temporary layoff. As a result, stories about the Great Recession and the fallout from the Covid-19 pandemic have left Gen Z particularly concerned about their financial health and well-being. One other concern Gen Z faces is the present inflationary bubble.


Interest in taxes for Gen Z seems to be driven by income. 37% of those who made less than $50,000 cited “how to do my taxes” as the number one skill they’d like to learn vs. 31% for those who made more than $50,000.


Debt is another area of huge concern for Gen Z. During 2020, Millennials and Gen Z saw the greatest debt growth. Again, income played a direct role, with those making more than $50,000 being less concerned about debt than those who made under $50,000. One particular area of concern is student loans. Being incredibly well-educated means that Gen Z has also taken on larger student loan debt. Consider using a tool to calculate how to refinance your student loans to lower your monthly payments.

What Does Gen Z Need?

Gen Z excels in many different areas. The key for them is to continue taking control of their finances by self-educating. However, self-education isn’t enough. Gen Zers that want to make the most out of their finances also must adopt a mindset of personal responsibility and self-empowerment.

That means understanding how to live within your means, evaluating your spending and savings habits, and making any changes to put yourself on secure financial footing even if that means making sacrifices or delaying desirable purchases.


Content syndicated from Fee.org (FEE) under Creative Commons license.

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