Millennial Money Compared to Gen Z

Millennial money is always interesting. This population of people simply sees things differently than others. They’re almost always compared to Baby Boomers or Gen Xers when it comes to money. However, as Gen Z now enters adulthood, it’s interesting to compare the two younger generations.

Which Generation is Which?

I always find it helpful to remember who we are talking about when we discuss the generations in this way. There is some debate about the specific years that define each generation, of course. However, generally speaking:

  • Gen Xers were born between 1965 and 1979.
  • Millennials, sometimes called Gen Y, were born between 1980 and 1994.
  • Gen Zers were born between 1995 and 2015.

Each generation is shaped by the major experiences of their time. This, in turn, shapes their money habits. In other words, millennial money is defined in large part by what the generation experienced growing up.

9/11 and Millennial Money

A recent Business Insider article argues that 9/11 is the defining event of the millennial generation. People who were born in Gen Z simply don’t remember it happening. They’re affected by it, yes, but in a significantly different way than the millennials who experienced it full force.

People associate many different feelings and fears with 9/11. More than anything else, though, millennials seem marked with uncertainty about the future. What once seemed permanent turned out perhaps not to be. Of course, if your outlook is one in which the future is uncertain, that outlook is naturally going to shape your spending and saving habits.

Perhaps this has given way to problems with planning for the future at all. Research indicates that 52% of millennials do not have any retirement savings account. And yet, of that group with no retirement savings, 46% expect to retire before age 75 and an additional 12% expect to retire before 55. The numbers don’t seem to match the dreams, which suggests that perhaps they aren’t thinking realistically about the future at all.

The Great Recession and Gen Z Money

It might be too early to tell what the defining moment is for the Gen Z generation. However, The Great Recession has definitely had a huge impact.

Millennial children grew up in a time when the economy was relatively well off. Of course, there are variations in individual experience (which reflect privilege among other things) but overall, millennial kids didn’t worry too much about money when they were young. These were the kids that TV commercials targeted because they convinced their parents to buy things.

In contrast, Gen Zers have been affected by money insecurity due to The Great Recession. As a result, Gen Zers tend to learn about money at a younger age than the older cohort did. They are more concerned about their financial future. They’re conservative spenders. Millennials accrued a lot of debt for school, for example, whereas Gen Zers are more likely to hack their education to avoid that cost.

The Great Recession and Millennial Money

Obviously, millennials were also around for The Great Recession. However, it hit them at a different life stage, and that’s had a financial impact. Gen Zers learned about it from their parents. They saw reason to be concerned. They may have used the technology readily available at their fingertips to start earning income of their own. But they were still kids.

Millennials, on the other hand, were adults. They had student debt and were starting families – or postponing starting them precisely because of the cost. The result is that they had to use their money to get through those lean times, which means many of them have struggled to start building wealth for the future. The Gen Z kids are already putting pennies away for the next rainy day whereas the millennials are just trying to catch up.

Home Ownership Differences

One survey found that almost 60% of Gen Zers age 18-23 want to buy a house in the next five years. They are saving to do so. Perhaps that’s why they aren’t shy about asking for raises; research shows that 75% of Gen Z believes they should be promoted within their first year at a company.

In contrast, many millennials are still renting. One survey found that of those who are renting, 90% would love to buy a home … but fewer than 35% expect to do so in the next five years. Moreover, nearly 70% of those millennials who did buy homes actually regret doing so.

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