Gen Z’s Plan for Financial Freedom: A New Kind of Independence
Gen Z adults starting out in life are facing a different challenge—their financial independence. “Gen Zers are now in their late teens or early twenties. Some are graduating from college, starting their first jobs, or opening their first savings accounts. And while they already have big dreams about their financial future, it can also be a major stressor,” says Michael Norton, Senior Vice President of Investments at David Lerner Associates, Inc.
The top financial stressor for Gen Zers, who said money concerns impact their mental health, was paying for everyday expenses, which 52 percent of respondents in Bankrate’s money and mental health survey cited. Other commonly cited stressors included inflation and not having a stable income/job, both of which were cited by 50 percent of respondents, respectively.
What Is Financial Independence?
Financial independence means having enough money to cover your needs and wants, without always relying on someone else. It’s about being in control of your money. For Gen Z, this might mean:
- Not receiving money or help from parents to pay rent
- Paying off student loans or avoiding them completely
- Saving for future goals like travel, a house, or retirement
- Having the freedom to choose a job they love, not just one that pays the bills
This kind of freedom is just as powerful as the one we celebrate on July 4th.
How Gen Z Is Doing It Differently
Gen Z is growing up in a world that’s very different from their parents’ time. They’ve seen student debt grow and housing prices rise. They’ve also lived through a pandemic and watched people lose jobs and even their lives. Because of this, many Gen Zers are being smart about money early in life.
Here’s how Gen Z is working toward financial independence:
- Learning About Money Early
Many Gen Zers are learning about money through TikTok, YouTube, and podcasts and other online platforms. They follow influencers who talk about saving, investing, and budgeting. They’re not afraid to ask questions or search for answers. This is helping them make better choices at a young age. - Starting to Save and Invest Now
Even small amounts saved in a bank account or investment app will grow over time. Some Gen Zers are using apps to invest in stocks or cryptocurrencies. Others are putting money into retirement accounts like a Roth IRA. The earlier you start, the more your money can grow thanks to something called compound interest — when your money earns money. - Choosing Experiences Over Things
Instead of buying fancy cars or clothes, many Gen Zers prefer spending money on travel, hobbies, or starting their own businesses. Many Gen Zers work multiple jobs in order to fund their lifestyle choices. Some have turned to online opportunities such as web design and content creation. Online platforms have allowed people to maintain their current jobs while making money on the side as well. They value freedom and fun, and they know that being smart with money helps them enjoy life more. - Avoiding Debt
Student loans and credit card debt can slow down your path to financial freedom. Gen Z is looking for cheaper ways to get an education, like community college or online classes. They’re also careful with credit cards and spending only what they can afford.
If you’re a parent of a Gen Zer, this is a great time to talk about money. Be open about your own money choices — both good and bad. Encourage your kids to:
- Make a budget
- Open a savings account
- Learn about credit
- Set financial goals
Helping your kids learn about money now gives them the tools to become strong and financially independent later.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.