The 2008 financial crisis and the covid pandemic have hammered the finances of young people.
“Millennials [born 1981-96] and Generation Z [born 1997-2012] have experienced constant economic uncertainty,” said Michael Hershfield, Chief Executive of payments service Accrue Savings. His comments accompany an Accrue survey about personal finances among generations.
As for millennials, “entering the job market during a massive economic downturn, they have struggled to gain financial stability and have been hit with tidal wave after tidal wave of world-shaking events,” Hershfield said.
“Gen Z has had to cope with technology pushing perfection, head-spinning U.S. and global politics, and a looming recession.”
The effect of these factors on younger generations is potent, Hershfield said. “They are spending beyond their means, they feel pressure to keep up appearances, and they are anxious about saving.”
Young People Denying RealityThis leads these folks to fib a little (or perhaps a lot) about their finances. Only 15% of Gen Z and 18% of Millennials said they never lie about their financial situation, according to Accrue’s survey. That compares to 27% of Generation X (born 1965-85) and 58% of Baby Boomers (1946-64).
Spending also represents a problem for the younger generations. Only 5% of Gen Z said they never knowingly spend beyond their means, matching the number for Millennials. For Gen X, it’s 16%, and for Baby Boomers, it’s 22%.
At this point it’s probably no surprise to you that the younger generations struggle in other areas of personal finance too.
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A whopping 50% of Millennials and 43% of Gen Z said they are overwhelmed by saving money. By contrast, 49% of Baby Boomers said they simply save, without a specific goal.
Whipping Out the Credit CardThe younger generations also use credit to pay down loans more often than the older cohorts—specifically it’s using credit cards for buy now, pay later purchases. The total is 38% for Gen Z, 44% for Millennials, 36% for Gen X and 21% for Baby Boomers.
Looking at the survey’s results for all ages, 50% of consumers acknowledge engaging in risky financial behavior. That includes:
· 19% draining their savings accounts,
· 18% avoiding paying bills,
· 18% taking on too much credit, and
· 10% taking bad advice.
So it looks like a lot of us, young and old, have work to do on our personal finances. But the particular problems of the younger generations might serve as solace for older people who rue the loss of their youth.