Though Gaps Remain, Gen Zers Improve Financial Habits Amid Coronavirus Crisis
In some ways, younger Americans have been handed a sack of coal — financially — during the coronavirus pandemic. Notably, a report early in the pandemic found that Gen Zers and millennials were nearly twice as likely as boomers (likely their parents’ generation) to say the COVID-19 crisis wreaked havoc on them financially and upended any semblance of financial security.
However, there is a brighter horizon. According to a recent Bank of America survey, which looked at how the financial priorities and habits of Gen Zers (ages 18 to 24) have shifted during the pandemic, 68% are feeling optimistic about their financial futures, despite hiccups and roadblocks.
80% of Gen Zers have taken positive financial steps in past year
According to the Bank of America survey, 4 in 5 Gen Zers have taken at least one positive financial step in the past year. That includes:
- Adding to their savings (70%)
- Mapping out financial goals (29%)
- Contributing to a retirement account (26%)
- Investing money in the stock market (26%)
And while the pandemic has certainly upended financial plans, nearly 7 in 10 Gen Zers say it’s impacted their financial priorities for the better. In fact, 33% now have a stronger focus on saving for the future, and 19% are keen on adopting a frugal lifestyle.
Gen Z women face financial knowledge, investing gaps
Even in these optimistic times, investing and pay gaps still persist for women. Among those surveyed, Gen Z women are less inclined to feel educated about investing (22%, versus 37% of Gen Z men). Further, they are less likely to have invested in the stock market in the past year (17% for Gen Z women, versus 25% of Gen Z men).
Gen Z women also feel as if they’re at a disadvantage with:
- Receiving equal pay (52%)
- Advancing their careers (45%)
- Being financially independent (35%)
- Growing wealth (30%)
Gen Z women also feel less knowledgeable than their male counterparts about managing debt (56% versus 66%) and saving for retirement (35% versus 41%), and are more likely to say that debt is a barrier to achieving financial success (23% versus 14%). However, they also say tackling debt payoff is a top priority for the year ahead at a higher percentage than Gen Z men (23% versus 18%).
According to the survey findings, women are shouldering more debt than their male counterparts, so the figures here shouldn’t come as a surprise: In fact, 36% say they have at least $5,000 in debt, versus 28% of Gen Z men.
But despite these barriers, Gen Z women are more likely than Gen Z men to have made positive moves with their money in the last year (82% versus 78%). Among those who made them, Gen Z women were more likely to have:
- Contributed to savings (76% versus 63%)
- Talked openly about money with family, friends or colleagues (63% versus 48%)
- Stuck to a money management plan (27% versus 21%)
- Sought guidance on managing finances (25% versus 16%)
Minding the gaps in financial education
While Gen Zers are being more money-minded and financially savvy, 34% still say their financial know-how is low. Among them, 40% lament that they don’t know where to start upping their financial education.
The areas in which they do feel knowledgeable include basic concepts like:
- Saving (85%)
- Managing money (82%)
- Budgeting (77%)
However, that know-how tapers off — or drops precipitously — with:
- Credit scores (61%)
- Paying off debt (61%)
- Applying for and managing credit cards (57%)
- Saving for retirement (38%)
- Investing (30%)
- Purchasing a home (25%)
Gen Zers working toward paying off debt can consider using the debt avalanche or debt snowball payoff methods. Both are popular repayment strategies with different focuses.
Those who need further help could look into debt consolidation loans to roll their debts into one and make payoff easier.
Methodology: Bank of America commissioned Ipsos to field a survey of 1,024 U.S. adults ages 18 and older, fielded Aug. 12 to Sept. 7, 2021. A partially overlapping sample of 635 Gen Zers ages 18 to 24 was also used, which included 28 from a nonprobability sample.