Is Generation Z Saving?

Generation Z, the cohort born between 1997 and 2012, is often thought of as being more financially savvy than their millennial predecessors. But are they actually saving for the future? Let’s take a closer look.

First, it’s important to note that Generation Z is still young, with many members still in their teenage years or early 20s. As a result, many may not yet have the financial stability or resources to focus on long-term savings. Additionally, the COVID-19 pandemic has significantly impacted the job market and financial outlook for young people, which may further complicate their ability to save.

Despite these challenges, there are some indications that Generation Z is taking steps towards building a more secure financial future. According to a recent study by TD Ameritrade, 60% of Generation Z respondents said they are already saving for the future. This is a promising sign, especially considering that the same study found only 52% of millennials and 48% of Generation X respondents reported saving for the future.

Furthermore, Generation Z appears to be more focused on saving for specific financial goals than previous generations. A survey by financial services company Ally found that 67% of Generation Z respondents are saving for a specific purchase or expense, such as a car or a down payment on a home. This is compared to just 42% of millennials who reported saving for specific goals. By setting specific goals and working towards them, Generation Z may be setting themselves up for greater financial success in the future.

It’s also worth noting that Generation Z is more likely to seek out financial education and guidance than previous generations. A study by The Center for Generational Kinetics found that 60% of Generation Z respondents said they actively seek out financial advice from parents, friends, or financial professionals. This is compared to just 47% of millennials who reported seeking out financial advice. By educating themselves on personal finance and seeking guidance from trusted sources, Generation Z may be better equipped to make informed financial decisions and save for the future.

Of course, there are also some challenges facing Generation Z when it comes to saving for the future. One major issue is the rising cost of education. According to the College Board, the average cost of tuition and fees for the 2021-2022 academic year is $37,800 at private colleges, $10,560 for state residents at public colleges, and $27,020 for out-of-state residents attending public universities. With these high costs, many young people may find it difficult to save for the future while also paying for their education.

Another challenge is the prevalence of the gig economy and non-traditional work arrangements. With more young people working freelance or contract jobs, they may not have access to traditional employee benefits such as retirement savings plans. This can make it harder for them to save for the future and may require them to be more proactive in seeking out alternative ways to save, such as opening an individual retirement account (IRA).

While there are certainly challenges facing Generation Z when it comes to saving for the future, there are also reasons to be optimistic. Many members of this cohort are already saving for specific goals, seeking out financial education and guidance, and demonstrating a greater awareness of the importance of building a secure financial future. With continued support and guidance, Generation Z may be well-positioned to achieve their financial goals and secure a brighter future for themselves and their families.