It is an easy assumption to believe that every generation had the same challenges and growing pains as any other.
The truth is even generational experts admit that Millennials and Generation Z have encountered specific and unique challenges in their quest to build financial stability and the best financial life possible in this ever-evolving, ever-changing 21st century. While some older Millennials may have secured themselves a home and started families, this era’s young adults as a whole have yet to root themselves in financial confidence, even more so actual wealth.
Considering a troubled housing market, the still-lingering effects of COVID, rising inflation, and competing corporate philosophies between in-office vs. remote work preferences, and more, these two generations are experiencing a rather large amount of uncertainty – both in their goals of achieving their personal finance objectives and their positions in the workplace.
So a big question seems to be: What are the most significant and foundational challenges Millennials and Gen Z face in their young lives and careers, and how might credit unions help them navigate these unpredictable times?
Millennials and Gen Z want financial literacy from their chosen institutions
Integrating financial literacy initiatives for young credit union members is important for Millennials and Gen Z, and it’s actually what both groups claim they desire more from their given financial institutions. They believe improving and achieving financial health is just as important as their physical health, particularly Gen Z.
The ironic challenge to that sentiment is that while financial literacy rates are low across all five generations, Gen Z registered the lowest, according to the TIAA Institute and the Global Financial Literacy Excellence Institute (GFLEC) at the George Washington University School of Business.
“These findings indicate that individuals typically begin adulthood with low financial literacy and while it increases over time, financial literacy nevertheless tends to remain low,” says Paul Yakoboski, Senior Economist at the TIAA Institute. “Furthermore, financial wellness across generations tends to be more compromised among those with lower financial literacy.”
The good news is that despite the economic unpredictability created by the COVID pandemic, that kind of uncertainty has also underscored the need and desire for Americans to improve their personal financial knowledge. The numbers appear to support that sentiment: 39 percent of survey respondents claim they are now motivated to key in on their financial literacy objectives and goals. That feeling is more common among these younger generations, with 52 percent of Gen Z respondents appearing the most focused.
A concern for Millennials and Gen Z is that financial literacy and wellness classes aren’t even the dominant educational resource in which they are investing their attention and time. Rather, they are turning to alternative resources and methods to learn how to manage their financial literacy – resources that may not be the most reputable, knowledgeable, or intentional in getting students or viewers to their objectives or goals.
Reach out and be that reputable financial resource and mentor for your younger communities.
Mental health hurdles concern younger generations
The cultural conversation regarding mental health awareness particularly following the pandemic is increasing, while many corporate offices are establishing more work-from-home or hybrid working arrangements.
It’s an important conversation to engage, which carries with it significant risk if not acknowledged and in fact implemented if required.
According to a June 2022 study by the Journal of Affective Disorders, between 2020 and 2021 more than 60 percent of college students met criteria for one or more mental health problems, a nearly 50 percent increase from 2013. Business Journal followed up that statistic by stating “Companies that don’t address and invest in Gen Z’s well-being will pay the higher cost of talent tomorrow.” They cited a report by Mind Share Partners that found half of workers left their jobs in 2021 in part due to issues centering on mental health.
In fact, more than half of both Gen Z (53 percent) and Millennials (51 percent) contend the mental health solutions in the workplace are not advancing quickly enough. While it’s true their employers are openly discussing mental health solutions more openly, the tangible, practical results have not come to fruition. Many workers are financially stressed, but many also claim the workplace is a leading factor in that particular stress, according to a Deloitte Global 2022 Gen Z and Millennial survey.
The Financial Brand highlighted 25-year-old Serrava, who says she’s actually grateful that the traditional workforce has been affected by what she alludes to as the Great Recession. “More jobs are implementing permanent work from home options which I think is the greatest achievement. Restoring the option to stay home and work gives people their lives back.”
The Deloitte report adds, “Businesses have a responsibility to make hybrid work environments work for everyone. A big part of that will be fostering more diverse and inclusive work environments, which account for different working patterns and preferences.”
Millennials and Gen Z are living on the precipice of financial instability
While money and finances may not be the only thing with which Millennials and Gen Z concern themselves, it’s a rightful and deeply-embedded anxiety.
Nearly half of both Millennials (47 percent) and Gen Z (46 percent) claim to live paycheck-to-paycheck while remaining in constant fear they will fail to cover their monthly expenses. The Deloitte survey found that the cost of living – including housing, transportation, and bills – is the top concern for 29 percent of Gen Z and 36 percent for Millennial respondents.
According to DailyPay CMO Jeanniey Walden, with nearly half of young workers living paycheck-to-paycheck it’s no surprise roughly the same number claim burnout, financial stress, and overall economic anxiety.
“This mental health epidemic has been building for years and is now accelerating with inflation-adjusted weekly earnings down 3.9 percent in May,” says Walden. “A distressed worker is a distracted worker and their pain is being felt by employers through losses in productivity, engagement, and retention. The Great Resignation has become the Great Rotation as workers job hop to make ends meet.”
Some groups within Millennials and Gen Z believe they’ll never be able to retire with any level of comfort. Both generations believe the cost of living is simply too high, according to the Deloitte report. It’s a primary concern, above even such worries as unemployment, mental health, health care, and crime.
Misplaced investment in social media as a financial literacy tool
Along with many in prior generations, Gen Z doesn’t believe they were adequately taught personal finance in school, particularly the specific topics they felt were relevant to their financial future. According to GoBankingRate, this missed opportunity resulted in 38 percent of Gen Z learning personal finance from such digital platforms as TikTok, YouTube, and other social media sites. More specifically, 34.3 percent of those respondents specifically cited TikTok and YouTube as their social sites of choice.
Do you believe these are acceptable long-term financial mentorship tools? We don’t either.
It is estimated that around a third of both Gen Z and Millennials will go to the blog of a credit union or other financial institution, so there again lies hope and opportunity for our dogged and ever-continuing financial inclusion efforts.
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