Gen Z money advice. The money lessons the younger can offer the older generations
Max Yong
“Cut down on avocado toast and maybe you can afford a house” is a common refrain from millennials and Gen Z Australians. These parodies of younger generations tend to make fun of their supposed laziness, social media obsession, and frivolous spending.
Like many clichés, this one may have some basis in truth. But based on my experience teaching personal finance to hundreds of young people, I think this characterization is generally unfair.
There is growing evidence of this, driven mainly by the rapid rise in house prices. The situation of Generation Z may be worse more than their parents’ generation. takes anymore more than 12 years saving a deposit of 20 per cent on the average house, compared to six years in the early 1990s.
In conclusion, Generation Z is more interested in financial matters More than any other generation in Australia and were found to have cut spending the most during the recent cost of living crisis (aka “cozzie livs”).
I do not want to reignite the generation wars that are often sensationalized. While many older Australians claim to have reasonable wisdom, they shouldn’t pretend to be perfect when it comes to their finances. So there is an opportunity to learn from young Australians how to manage their money.
For starters, Gen Zers are more willing to switch jobs early in their careers, often for pay increases and improved working conditions. Young workers changing jobs on average $7,500 more per year than the rest.
Generation Z prioritizes living today rather than accumulating wealth at all costs.
“Why would I stay somewhere with lower pay and worse working hours?” One of my students says this. Of course, broader career considerations are important, but I applaud the younger generation for rejecting blind loyalty to multibillion-dollar companies. Long gone are the days when workers would remain loyal to a single employer for decades.
Young people are also receptive to employers touting a “family-like culture” that in practice means long working hours and little appreciation for leadership.
It’s not just employers where Gen Z is less loyal. Younger Australians are more likely to switch banks and financial providers than older generations. almost a third A higher proportion of Gen Z Australians intend to switch banks when their current bank’s interest rates are not competitive.
This type of conscious consumer behavior is not only great for those optimizing their own finances, but also forces banks to be more competitive in their offerings. A succession of chief financial officers from both sides of politics have regularly warned consumers not to become overly loyal to their banks, insurance companies or telecommunications companies.
When Generation Z doesn’t change jobs or banks, they focus on side hustles. Reportedly, one quarter Although this isn’t all good news, more than half of Gen Z Australians have this trait. The increase in side hustles is likely due to cost-of-living pressures and low wage growth forcing young people to find ways to supplement their primary income.
On the other hand, side hustles improve skills and encourage entrepreneurship. What starts as extra income can turn into something more significant.
Australian Bureau of Statistics adds “content creator” (or “influencer”) to the list Official jobs list in 2024 It points out that these new ways of working are no longer marginal pursuits but recognized parts of the labor market.
In an economy tackling productivity growthIt would probably be beneficial to encourage young people to try new business models.
Finally, Generation Z prioritizes living today rather than accumulating wealth at all costs. Economists call this “consumption smoothing.” I think it’s a healthy mindset shift to treat money as a tool to provide flexibility and life satisfaction (at any age) rather than seeing it as an end in itself.
Money has no intrinsic value. It is a means of change that derives meaning from the ability to buy the things we want, whether that means traveling, supporting your family, or giving generously to others.
Focusing on using your money for things that are important to you while you are alive is, in my opinion, a superior approach to dying a multimillionaire. If you’re 80 and rich enough to discuss a third Porsche, you may wonder whether you should have taken that year off to travel the world in your 20s.
It may be easy for older generations to look at Gen Z and decry the loss of long-term careerism, corporate loyalty and hawkish savings discipline. However, I can say that Generation Z has deliberately replaced these with things they consider more important.
What Generation Z lacks in wisdom is probably made up for in wisdom; Something that is unquestionably necessary in these tough economic times.
Max Yong is a lecturer in personal finance at Harvard University. He previously lectured on personal finance at the University of Melbourne.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
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