Why do Gen Z struggle to make money despite being about the most fitted generation to enter the booming digital economy? We shall consider the various facets of this question, influencing factors, and potential escapes for Gen Zs.
Consequently, we shall assess the challenges and impact of such existential realities on mental health. Similarly, we shall consider the many economic challenges faced by Gen Zs while trying to break the financial escape velocity.
Gen Z and the Evolving Economic Landscape
One of the most commonly fingered items in Gen Z’s existential crisis is the ripple effect of recent financial crises, particularly those of the scale of a global recession. For example, the shock waves of the Great Recession of 2008 are still being felt in 2024. How, you ask? Well, competition in finance, housing, and the job market has not been the same since 2008.
Before the recession, it was commonplace for parents to fund their kids’ college educations conveniently. That normal changed overnight, so Gen Zs grew up during a financially paranoid period. Unemployment climbed, many homes were lost to foreclosures, and the general populace became very conservative with spending.
It is little surprise that Gen Zs have an entirely different worldview about employment and personal finance. Almost two decades later, the economy is still struggling to recover from the devastation of the Great Recession. If Gen Zs didn’t exist, the labor market would still struggle to sustain the older generations. So, you can imagine how much competition Gen Z adults face as many of them become financially independent.
Judging by these economic realities, many Gen Z adults don’t even have good-paying jobs, forcing many to live paycheck to paycheck. Many of these young adults are forced to take on multiple part-time jobs or engage in the gig economy struggles of job bidding. However, wages have remained mostly stagnant while living costs increase daily.
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Educational Challenges for Gen Z
We mentioned earlier that higher education was a breeze for baby boomers and even some millennials. However, Gen Zs have not had it easy. Financing education with loans for this generation has been analogous to taking swimming lessons with heavy weights fastened around your neck.
Of course, several studies suggest that millennials grapple with more student debt than Gen Zs. However, this financial burden still significantly affects the latter’s inability to live economically fulfilling lives. Interestingly, incurring student debts to acquire a degree does not assure job security after graduation.
So, after the average Gen Z graduates from college, all their economic activities are conducted in the overwhelming shadow of student loan debts.
In addition, recent technological innovations have created an ideological chasm between educational institutions and the labor market. Recent job listings request tailored proficiencies that reflect advances in various industries. Meanwhile, most institutions are sticking to their pedagogical guns. Also, the few institutions that tailor their curriculum to industry innovations do so at a slow pace.
Consequently, many Gen Z graduates are left unprepared for the mental health impact of the realities that come with job market competition. In most cases, these young folks seek advanced degrees, specialized training, or acquire certain technological skills to become a good fit for jobs.
Remember, interest rates on their student loan debts are compounding, and Gen Zs still have to struggle to break into the job market. So, many youths are ditching the prospects of attending college and are instead opting to earn through gig economy struggles.
How Technology Shapes Gen Z
Humans are the best poster illustrations of social animals. Meanwhile, social media has made us more social than ever, both old and young. However, the use of social media platforms like TikTok and Instagram seems to be having a more prominent impact on the personal finances of Gen Zs.
With the help of the internet and social media, the average Gen Z is connected to way more people than the boomers could dream of when they were young adults. Consequently, expanding social connections among Gen Zs has increased their sphere of influence. Unfortunately, each Gen Z has equally become prone to the subtle influence of others.
Social media has literally encouraged a trend of consumerism among these young adults. Gen Zs tend to spend on the latest fads and fancies at the expense of their financial security. Despite the wealth gap and income inequality, young adults strive to replicate expensive online trends. Many of these young adults are neck-deep in credit card debt just to keep up with the Joneses. Daily rising inflation and high costs of living are equally not helping matters.
On the other hand, some Gen Zs are embracing the digital economy and social influencer lifestyle. There’s no arguing that the growing digital economy makes young adults money. However, many lack the skills to transform their digital hustle into a full business.
Social and Cultural Influences on Gen Z
Some decades ago, it took a number of years for fashion trends to become a thing in a small community and even more years to spread around the country. That’s no longer the case with real-time global connections made possible by the internet and social media. Now, a young adult can get instant updates on the new indulgences of their celebrity crash.
By implication, Gen Zs and other young adults are caving under the pressure of ubiquitous trends. In today’s fast-paced world, youths are more likely to bow to the temptation to spend impulsively. It is little wonder that shoppers usually flood gadget launches and Black Fridays in almost zombie-like manners. All these social pressures to keep up often have a mental health impact on Gen Zs.
Similarly, the outlook of Gen Zs on life seems to be a far cry from what was applied some generations ago. The tastes, values, and priorities of Gen Zs are obviously different from those of their parents. For example, studies have revealed that the average Gen Z is not outrightly interested in buying a home. Instead, they prefer to rent, share spaces with friends, live with friends, or even travel the world. They are also the generation singing praises of the four-hour work week and don’t mind braving remote work limitations.
Of course, prioritizing experiences over physical assets can make for a fulfilling life. However, without proper management, the finances of youths maintaining such lifestyles may spiral out of control.
Understanding the Gap in Financial Literacy
While the financial crisis of the average Gen Z is a glaring menace, helping them thrive is not an impossibility. The lack of financial literacy is a common missing link that makes the financial struggle prominent among young adults.
Educational institutions don’t teach students how to invest, budget, save, or manage debt. So, young adults are left to their whims and forced to ‘learn on the job’ by going from one financial crisis to another. Naturally, Gen Z’s financial problems are peculiar ones. These folks often take every financial carrot dangled before them. Consequently, young adults take on high-interest loans, invest in high-risk digital assets, refuse to start an emergency fund, and often end up in a financial ditch.
Personal finance experts suggest that financial literacy could transform the economic realities of all youths and adults, Gen Z included. It would also make them aware of tips for working around the high cost of living.
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Financial Strategies for Gen Z To Tackle Challenges
Despite the financial crises plaguing young adults, Gen Zs hold the greatest potential to get a handle on the economy and milk it for their financial benefits. Here are some practical steps that Gen Zs could adopt to improve their financial standing:
1. Actively Seek Financial Advice
It doesn’t hurt to become the financial protege of a financially successful adult. Exploit the social currency around you and ask folks with a handle on financial freedom to teach you the ropes. If such free advice is not forthcoming, do well to consult with a financial advisor or counselor.
The recommendations of these financial mentor professionals are likely to help you get out of debt, build a wealth throve, or even start a business that generates passive income.
2. Become a Perpetual Learner
Financial literacy does not end with a short online course on the subject or a one-time consultation with a finance expert. Endeavor to inculcate self-improvement habits such as reading books that explain specific concepts in personal finance.
3. Live for Tomorrow
“Live in the present,” that advice is a common one. However, it could be unfortunate for your personal finances in light of the prevalent cost of living. There’s nothing as bad as spending your income on expendables as soon as you earn it. Save for tomorrow, invest your wealth to beat the bite of inflation and the accompanying high cost of living. This should lead you to financial freedom and a blissful retirement.
4. Exploit Digital Opportunities By Working Around Remote Work Limitations
Gen Zs and other young adults are some of the most digitally versatile. While boomers are massaging their retirement funds and looking to knock off the rest of their mortgage, most young adults struggle to find a footing in the competition of the job market. While it is true that the gig economy struggles are real and instances of remote work limitations are common, some young adults are still making headway in that industry. So, Gen Zs should do well to take advantage of their digital proficiencies and conquer the world.
Is Gen Z struggling? Obviously, yes. However, for Gen Zs, it’s not all economic challenges; these folks have many strengths to leverage. It is easy for this generation of young adults to ride out the ripples of the 2008 financial crisis and bridge the gap of income inequality. Gen Zs can become financially stable adults by holding the reins of their personal finances tightly.