Gen Z Is the ‘Most Investment-Savvy Generation,’ What?!
1Q, 1A – where we ask one question and an expert gives one answer
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Doom spending, quiet quitting, soft saving – these trendy terms attempt to describe how Generation Z approaches work and money. But how accurate are they? Zosia Cooper, a Sociology doctoral student in UC San Diego’s School of Social Sciences, is cutting through the noise to find out what really shapes Gen Z’s financial habits.
Cooper, who has interviewed more than 60 recent college graduates about their financial wellbeing, is especially curious about investment. One survey has shown that 45% of Gen Z is investing, and most began before they turned 20. Another survey rates them as the “most investment-savvy generation.”
While not every member of the generation invests in the same way or for the same reasons, Cooper has noticed some very interesting trends. We sat down with her to learn more.
Why is Gen Z investing sooner and more often than previous generations, and how does this help us understand the ways Gen Z view their careers and financial futures?
Gen Z is very worried about their financial futures. Many do not trust institutions, like employers or the government, to support them in times of financial need. They also see goals like owning a home as increasingly out of reach. Due to these anxieties, young people are imposing a lot of pressure on themselves to make the right financial choices.
That’s where investing comes in. Many Gen Zers feel very guilty about their consumption habits -- the "avocado toast" messaging has had an effect! --and blame themselves if they're not where they want to be financially. Investing can help to hedge against these bad feelings and the uncertainty about the future that comes with them.
As for who is investing, some of the demographic data may be surprising. Among 18-25 year olds, young people of color are the most likely to have investments. Women are increasingly entering financial markets, but a large gender gap still exists. Business majors feel confident to play with the market in more risky ways, despite learning in their coursework that these risks are often costly.
Photo by Dom Cooper.
While social media can play a role in spreading information, most Gen Zers start investing after being encouraged to by friends or family members. Immigrant parents seem to be especially keen on getting their children to invest, because they care a lot about building generational wealth. This personal connection is key, as young people are deluged with information from social media. While some of it concerns personal finance, they have a hard time parsing the good advice from the bad without some help.
Gen Z is also prioritizing boundaries and self care in their work lives, as many feel that their careers are not enough to ensure financial stability. Many no longer want to rely on employers for their livelihood at all, and plan to build their wealth through investment in order to pursue entrepreneurship in the future.
Cooper’s research has been funded in part by the Oceanids at UC San Diego and the Yankelovich Center for Social Science Research.
Young people are imposing a lot of pressure on themselves to make the right financial choices.
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