There are many differences between Millennials and Gen Z. Just ask anyone under 40 for their opinion on skinny jeans.
That said, Generation Y (born 1981-1996) shares some qualities with Generation Z (born 1997-2012), thanks to a similar upbringing. Millennials and Generation Z were largely raised by “helicopter parents”, notorious for overprotecting and abusing their children. They were also raised alongside modern technology – including instant and unlimited access to information and social media – with Gen Z being the first all-digital generation.
Watch: stimulus updates you need to know for summer 2022
More: 8 remote jobs that pay at least $20 an hour
Millennials and Generation Z also came of age during turbulent economic times, like their parents and grandparents. This means that they both have inherited a few habits when it comes to money.
According to Starr Wells, owner of personal finance blog A Centsational Life, one of the biggest financial habits shared by Millennials and Gen Z is frugality. “Having grandparents who survived the Great Depression and parents who lived through the Great Recession, Millennials and Gen Z know all about frugal living,” she said. “Their parents and grandparents went through tough financial times, passing on their penny-pinching habits.”
It should be noted that many millennials were new adults themselves when the Great Recession hit. In an interesting parallel, older Gen Zers have also struggled financially as new adults, with the gig economy taking a major hit during COVID.
According to the World Economic Forum, 72% of Gen Zers say cost is the most important factor they consider when making a purchase. “Neither Millennials nor Gen Z like to pay top dollar for anything,” Wells said. “That’s why today’s sales tactics thrive on offering small discounts, BOGOs, and reward points to make thrifty consumers feel like they’re saving money.”
POLL: Do you have a side concert or other activity?
Know the value of hard-earned money
According to Steve Wilson, founder of Bankdash, a key lesson Millennials and Gen Z have learned from older generations is the value of making money and pursuing opportunities. “I remember my parents gave me an allowance, and everything I wanted to buy had to come from that allowance (in addition to necessities, of course),” he said. Wilson added that her allowance had to be earned by doing household chores and helping around the house – a common experience among young adults today.
As a result, Millennials and Generation Z have learned the importance of saving and finding creative ways to earn money. When it comes to retirement savings, a study by Charles Schwab found that millennials started saving for retirement in their twenties, about 10 years before baby boomers. Another Pew report found that as of 2018, they also had higher 401(k) balances than Gen Xers at the same age. Meanwhile, Gen Zers are losing an average of a third of their income, favoring saving and investing over spending.
“Looking back, I think it was an extremely valuable habit that helped me be aware of my finances and manage them smartly growing up,” Wilson said.
Go to college
“The biggest financial impact that millennial and Gen Z parents have had on their children is their emphasis on a college education as the path to financial success,” said Melanie Hanson, editor-in-chief of ‘EDI Refinances. She said the biggest jump in college enrollment happened when baby boomers started attending college, though it wasn’t until millennials started to turn the age. from college in the late 1990s and early 2000s that a college education became the expected path for most students (rather than a good option). for the brightest).
Unfortunately, Hanson noted that this heavy emphasis on college came just as state and federal funding to support tuition was beginning to dry up. “The result has been two generations that are far more educated and far more in debt than those before them,” she said.
In 2020, average US student loan debt averaged around $28,400, according to CollegeBoard data. However, Experian found that millennials average more — around $38,877. The future of Gen Z with student loans is still unknown. However, as the cost of a college education continues to rise, it’s likely that Gen Z will encounter many of the same challenges as Millennials today.
More from GOBankingRates