What percent of Gen Z is financially literate?
According to the US National Association of Plan Advisors (NAPA), Gen Z has the lowest level of financial literacy, with only 28% of questions being answered correctly on average.
According to recent data from a 2023 Pew Research Centre survey, Gen Z is more financially independent at a younger age than prior generations. While still in school, a sizeable proportion of Gen Zers work part-time, freelance, or have side hustles. This independence has prompted them to seek more financial control.
Only 57% of American adults are financially literate. 73% of teens want a more personal finance education. Americans lose an average of $1,819 annually due to financial illiteracy. 77% of Americans are financially anxious.
Key findings
Stock ownership and retirement accounts: 37% of Gen Z and 55% of millennial respondents own individual stocks, and 36% of Gen Z and 47% of millennial respondents report having a retirement account.
The estimated average annual earnings for Gen Z are $22,924.68, or $1,910.39 per month. Gen Z spend most of their money on household bills expenses, with 52.3% saying they spent the most money on these costs. The estimated average amount Gen Z spends on socializing is $166.75 per month, totaling $2,000 a year.
1. Money Management Skills. Most Gen Z individuals are concerned about financial literacy but at the same time, 84% rely on parents and family for financial information.
By gaining a better understanding of personal finance, you can make informed decisions and avoid the pitfalls of excessive debt. Financial literacy equips you to manage your money wisely, steering clear of lending practices that are harmful to you.
Each generation handles money in a different way. Afterall, people have grown up in different eras, they place value on different commodities, and some are busy saving for retirement while some are squirreling away their pennies in order to see the world one day.
Yet, more than a third of young Gen Zers have also faced setbacks in the past year, the survey found, which may have led them to stop saving or take on more debt. Gen Z faces unique financial challenges compared to older generations. College graduates earn 10% less compared to their parents, recent research found.
For example, women, the poor, and lower educated respondents are more likely to suffer from gaps in financial knowledge. This is true not only in developing economies but also in countries with well-developed financial markets.
What percentage of people are financially free?
Living debt free: 54.2% Living comfortably, but not necessarily being rich: 50% The ability to regularly meet all of their financial obligations and still have some money left over each month: 49.3% Never having to worry about money: 46.2%
U.S. adults have big gaps in their financial knowledge
For instance, adults correctly answered, on average, 50% of the 28 basic money questions in the 2022 TIAA Institute-GFLEC Personal Finance index, the sixth annual barometer of financial literacy.
Additional insights - Financial Health
While just over half of Gen Z (52%) feel confident that they're on track to meet their financial goals, fewer than half (48%) are fully or even mostly financially independent. However, Gen Z still feel able to handle everyday financial activities.
Generation Z might be the youngest group of spenders, but they may actually be the best ones at saving. You see, Gen-Z — those born between 1995 and 2012 — are in middle school, high school, college, and even a couple years into the workforce.
“The reason that millennials don't save as much as Gen Z is likely because they have more financial responsibilities,” Adams said. “For instance, many are homeowners, have families and pay higher ongoing expenses, such as groceries, clothing, insurance and medical costs.”
Members of Generation Z are struggling to keep up their credit scores because of a combination of higher borrowing costs, slowing wage growth, student loans and other debts.
The current median income, half earn more and half earn less, for a Gen Z worker nationwide is around $37,300 according to an analysis by GoBankingRates.
Born after 1997, the students of Generation Z make up a majority of today's undergraduate population. Members of Gen Z are more racially and ethnically diverse than any previous generation – they're also on track to be the most well-educated generation yet.
Born between 1997 and 2012, the 68 million members of Gen Z who make up 20.6 per cent of the US population are quietly shaping a new paradigm in generational giving. Gen Z is already proving to be one of the most generous generations, when measuring total annual giving as a percentage of disposable income.
Gen Zers generally have strong values related to racial justice and sustainability. Mobilizations like the Global Climate March, led by Gen Z activist Greta Thunberg, thrive on the activism of young people. Climate change is one of the issues Gen Zers care about most.
Why is Gen Z struggling financially?
The current economy and job market are primary sources of uncertainty for this generation, according to EY's 2023 Gen-Z Segmentation Study. Seeing the wave of massive layoffs in late 2022 through the first half of 2023 has created feelings of distrust toward employers and job insecurity.
Only 24 percent of millennials demonstrate basic financial literacy, according to a study from the National Endowment for Financial Education.
No fewer than 61% of Millennials surveyed by Investopedia said they're confident to very confident about their overall financial knowledge; 63% said they know more than their friends and peers do. However, three out of four Millennials (74%) said they are at least somewhat stressed about managing their finances.
By generation, Gen Xers have the most nonmortgage debt
Comparatively, the generation with the least debt — Gen Zers (ages 18 to 26) — owes less than half as much, with an average balance of $21,665.
Is Gen Z the poorest generation? Gen Z has experienced higher poverty rates than millennials, Gen Xers and baby boomers, according to the KIDS COUNT Data Center, but Gen Alpha is the poorest generation to date.
