Millennials are saving earlier than the previous generation, avoiding credit card debt, thinking about retirement already, and shopping around for bargains – both with purchases and with personal loans or investment opportunities.
Broken down by generation, though, Gen Zers have the most confidence in their savings (69%), followed by boomers at 65%, and both millennials and Gen Xers at 60%.
The figures for Gen Z are above the overall average for American workers, at 24 percent, and above those for millennials, about 23 percent of whom saved nothing in 2021 or 2022.
This group had an average savings rate of 14%, compared to the 12% savings rate reported by millennials, Gen X and boomers. A number of factors could be driving Gen Z to save for the future, including an uncertain stock market, inflation and financial experiences during childhood that left an impact.
Members of Gen Z and millennials are an important group of investors -- but what are they investing in? Millennials (born 1981 to 1996) and members of Generation Z (born 1996 to 2012) can more easily access the stock market and other investments than any previous generation.
They've reaped benefits from low interest rates and inflated housing prices, which increased the value of their assets. As such, many boomers have acquired enough to partake in the greatest wealth transfer in modern history, which will go to their children and philanthropy.
According to a study from Northwestern Mutual, Gen Z, particularly those Americans between the ages of 18 and 25, had the highest levels of confidence in their careers and in their ability to achieve financial security. As a result, they expect to retire at 59.
Gen Z's Future in Real Estate Is Uncertain
Any generation's ability to own a home ultimately comes down to whether they can afford a down payment plus closing costs, qualify for a mortgage and handle the responsibility and costs that come along with owning a home,” said Scott Krinsky, partner at Romer Debbas, LLP.
According to a 2021 Consumer Culture Report by 5WPR, Gen Z is prioritizing electronics, technology, health, and wellness. Conversely, Millennials and those from older generations prioritize travel and experiences, home goods, and furniture.
Average Savings by Age 25
The Federal Reserve doesn't provide a specific metric for savers in their 20s. Instead, it compiles savings information for Americans under 35. The Fed's most recent numbers show the average savings for the age group that includes 25-year-olds is $11,250. The median savings is $3,240.
Gen Z's awareness and approach to mental health can have a positive influence on their parenting by allowing them to be emotionally healthy and drivers of open communication. It can also help shape a future generation that will understand, accept, and seek to treat their own mental health issues.
"When it comes to savings and investments, Gen Z comes out on top with a higher number of them saving from an early age, sticking to a budget, having more knowledge on investing and making investments."
Because three-quarters of Gen Z consumers state that sustainability is more important to them than brand names. According to Nielsen, 75% of Millennials are eco-conscious to the point of changing their buying habits to favor environmentally-friendly products.
Much of Gen Z has the financial basics down, though struggle with more complex topics such as investing and debt. Gen Z feels equipped to handle basic financial tasks, including budgeting (71%), managing day-to-day expenses (70%) and building/managing credit (65%).
Born between 1995 and 2010, this generation have already found themselves up against immense challenges as they make their way into adulthood: climate change, inequality and social unrest, political division, economic distress and more.
Gen Z is very concerned about their ability to communicate and forge strong interpersonal relationships. This may be due to the fact that technology has negatively impacted their cognitive skill development, and they recognize that their social skills, like critical thinking and communication, are weak.
The youngest generation in the workforce is also more likely to play conservative with their paychecks right now, with Gen Z most likely to put in longer hours or work harder. Nearly a third are also considering taking a second job or a more stable gig in the face of potential recession layoffs.
The research, conducted in June through December 2020, focused on Gen Z parents (20-24 years-old).
Various think tanks and analytics companies also have set a 1997 start date. Although the U.S. Census does not identify Gen Z like it does the baby boomers, a U.S. Census publication in 2020 described Generation Z as the “young and mobile” population with oldest members of the cohort born "after 1996".
It is estimated that Gen Z will have 17 jobs across 5 different careers in their lifetime.
Gen Z is also the smartest and best educated generation. Having an unlimited wealth of information at our disposal has not gone to waste. In America, 57 percent of Gen Z is reported to have enrolled in a two-year or four-year college, compared to 52 percent of Millenials and 43 percent of Gen X.
As a result, more millennials than ever report being happy. That's especially true compared to the Baby Boomers, which the Pew Research Center labeled the “gloomy” generation. Baby Boomers tended to rate their overall quality of life much lower than non-boomers.
Gen Xers would come to be known as one of the “least parented, least nurtured generations in U.S. history,” with parents divorcing at historic rates as both mom and dad worked in pursuit of an American Dream.