Over 50% of Gen Z adults have investments; 26% are in the stock market.
Only 1 in 4 Gen Z individuals feels confident explaining the stock market.
Approximately 25% own cryptocurrencies and stocks; 10% own NFTs.
Gen Z shows highest confidence in spending and saving but struggles with debt and taxes.44% of Gen Z non-investors cite not knowing how to start as a key barrier.
Gen Z earning over $50,000 show greater confidence (57%) in financial knowledge than those earning less (39%).Social media heavily influences Gen Z’s financial literacy.
Summary
Gen Z demonstrates notable participation in investing, with over 50% holding various investments, including stocks, cryptocurrencies, and NFTs. However, only 25% feel confident explaining the stock market, and they exhibit the highest assurance in spending and saving. Key challenges include limited understanding of taxes, debt management, and credit. Non-investors often cite a lack of knowledge as a significant barrier. Higher-income earners show greater financial confidence than those with lower earnings. Social media plays a major role in their financial learning, creating both opportunities and confusion as they navigate the overwhelming amount of financial advice available online.
Over fifty percent of Gen Z adults have already made investments—26% of them are in the stock market—however, only one out of four believes they grasp the stock market well enough to explain its workings to a friend. Among all financial concepts, they are most assured regarding spending and saving.
Essential Insights
While 54% of Gen Z have some form of investment, merely one in three (31%) are confident that they can describe how the stock market functions to a friend.
Approximately 25% of Gen Z participants in our survey possess cryptocurrencies and stocks, while 10% own NFTs.
While Gen Z displays the highest confidence in spending and saving, almost one-third believe they possess only a fundamental understanding of essential financial management concepts such as paying taxes and handling debt.
Gen Z individuals earning over $50,000 tend to have greater confidence in their financial knowledge (57%) compared to those earning below $50,000 (39%).
Forty-four percent of Gen Z individuals who aren’t investing claim they don’t know how to begin.
According to 23-year-old financial advisor Zechariah Schaefer, whose company Ascent Personal Finance focuses on advising millennial and Gen Z crypto investors, “They have a broad understanding of finance, but lack in-depth knowledge on many topics.”
Consider Megan Rienzo, for instance. The 20-year-old sophomore from Siena College, pursuing a degree in finance, carefully monitors her expenditures and savings through a smartphone application. Through her finance courses, she has acquired knowledge on stock valuation and is passionate about investing; however, she still views it as too complicated and risky for her current financial situation to begin.
Financial Footing
It requires a highly self-aware generation to recognize what they lack knowledge of. Members of Gen Z involved in The 2022 Investopedia Financial Literacy Survey, which surveyed 4,000 adults in the U.S. through an online questionnaire, realize they are merely at the start of their path to financial independence.
For example, only 46% of Gen Z are confident in their financial knowledge, a lower percentage than that of baby boomers, Gen X, and millennials who reported similarly. One reason could be that, in 2022, there are numerous platforms available for people to access information—consider YouTube, podcasts, and TikTok, alongside conventional news articles.
Rienzo stated, “There’s an abundance of information out there, making it more difficult to determine what to seek.”
Gen Z is not short on confidence regarding their spending and saving habits, though. Forty-five percent of respondents assert they possess advanced knowledge of expenditure, whereas 42% indicated a similar level of understanding regarding saving.
Schaefer points out that the enthusiastic spending and saving behaviors of Gen Z (and his clients in particular) stem from observing their parents grapple with mortgage, credit card, and other forms of debt. Some clients, Schaefer noted, experience heightened pressure to save because of the student loan debt they are dealing with.
A domain where Gen Z faces challenges, however, is in grasping credit and debt management. According to the survey findings from Investopedia, nearly one-third of the Gen Z respondents believe they possess only basic understanding of credit and debt management.
Investing
Jack Rosenthal began his journey into investing at the age of 8 when his grandfather established an investment portfolio for him. During high school, he initiated the Young Investors Club, LLC—a fund aimed at teenagers for stock market investments, which currently boasts around 100 members and over $100,000 in assets managed. He is also the writer of various books, with each one acting as a guide to investing for teenagers. He is 19 years of age.
Rosenthal embodies the quintessential enthusiasm of Gen Z for investing. According to Investopedia’s survey, fifty-four percent of Gen Z has various types of investments, including mutual funds, exchange-traded funds (ETFs), cryptocurrencies, and non-fungible tokens (NFTs).
Additionally, it appears that everyone is participating in the activity in one way or another. In our survey, 48% of Gen Z women have investments, compared to 60% of Gen Z men, for example. Overall, 45% of individuals making under $50,000 annually are investing, while 73% of those with incomes exceeding $50,000 are doing so.
“Due to social media, Gen Z has greater knowledge about investing at their age than any prior generation,” Rosenthal mentioned. He also points out that shifts in the regulatory landscape, like permitting teenagers to hold accounts with parental supervision, have made access to the stock market possible.
A 2020 survey by the Harris Poll revealed that over half of the participants avoid discussing financial matters with their friends or family. However, the youngest generation deviates from that norm: 71% of participants report feeling at ease discussing money with friends, while 67% feel comfortable discussing finances with family—making them the most inclined in both categories across all generations.
New way
Generation Z is the initial generation to have smartphones and social media integrated into their everyday existence. They grew up alongside YouTube, Facebook, and the iPhone. Currently, the youngest demographic spends around 6.5 hours daily on their smartphones.
However, Gen Z seeks more than just entertainment—they are in search of information. As per the digital education firm Pearson, YouTube and video overall are the favored learning platforms for Gen Z, coming in just after teachers as a resource for learning.
As per Investopedia’s survey, Generation Z is the generation most inclined towards videos for learning about personal finance specifically. YouTube ranks as the leading platform for accessing finance-related content at 45%, with discussions with friends and family, online searches, TikTok, and financial info websites coming next.
The overwhelming amount of financial advice available on social media—from self-identified finance gurus on TikTok to Reddit communities like WallStreetBets—makes thorough evaluation a challenging task. Ultimately, there are no qualifications necessary for what someone intends to express on Instagram or any other social media platform.
Although they favor digital methods, almost one in three Gen Z individuals mention human interaction as their favored means of learning about finance.
“The charisma and personalities of certain individuals on these platforms can easily lead one to overlook the fact that personal finance is fundamentally personal,” Schaefer stated.
Still, it’s undeniable that video and social media have made financial information more accessible to everyone. What was once a rare asset exclusive to the affluent who could afford it, is now—thanks to digital media—an abundant resource accessible to everyone. With that access also comes responsibility, including the necessity of researching independently before following investment advice and conducting a background check on the information source.
Concern
When questioned about their understanding of personal finance, Gen Z shows particular worry regarding taxes. According to a survey by Investopedia, paying taxes is their second largest worry and the top skill they wish to acquire. Another major worry for Gen Z involves saving money, taking loans, and handling debt.
The financial habits of Gen Z can be attributed in part to the worldwide COVID-19 pandemic. According to a study by the ADP Research Institute, individuals from this generation experienced some of the greatest effects. Seventy-eight percent of Gen Z individuals reported their personal lives were impacted, whereas 39% indicated they lost their employment, were placed on furlough, or experienced a temporary layoff.
Here, examine Gen Z’s main worries in detail.
Taxes
According to the 2022 Investopedia Financial Literacy Survey, those with lower incomes exhibit greater interest in tax education among Gen Zers. Thirty-seven percent of Gen Z individuals earning under $50,000 indicated that “how to do my taxes” is the skill they most want to acquire, compared to 31% for those earning over $50,000.
A proposed reason for Gen Z’s emphasis on taxes is the widespread belief that the Social Security safety net will deplete. Almost 20% (19%) of individuals believe it’s very unlikely that Social Security will be accessible to them upon retirement, while 43% can envision a future when Social Security might cease to exist.
Another aspect, as noted by Schaefer, might be that in the gig economy, there are an increasing number of self-employed or entrepreneurial Gen Z individuals looking to launch their own businesses, potentially leading to complex tax situations.
Debt
Those of Gen Z who make less than $50,000 annually are more worried about saving and improving their credit score than those making more than $50,000.
And this data matches the reality of debt younger adults face today. In 2020, both millennials and Gen Z saw the greatest overall debt growth, with Gen Z seeing the largest growth across mortgage and personal loan debt specifically, according to Experian’s consumer debt research.
Investing and managing risk
Although over half of Gen Z has already invested in the stock market, investing and risk management are still among their least comprehended areas of finance. Thirty-two percent of Gen Z mention that their fear of losing money prevents them from investing, while 22% of individuals who are not invested attribute it to a lack of trust in the market.
Rosenthal, the teenage investment expert, posits that fear of risk is influenced by socioeconomic factors. In particular, the volatility of the stock market over the last ten years, driven by factors like the rise of retail investing, the war on terror, and digital disruption, has created anxiety around investing for certain members of Gen Z.
“Large fluctuations in the stock market instill fear, and that’s the sole market this generation has experienced,” Rosenthal stated.
If fear isn’t preventing them from investing, it’s uncertainty. The surge of financial products and services designed to streamline the investing experience for young investors has actually made it seem more complicated. Forty-four percent of Gen Z individuals who are not investing cite a lack of knowledge on where to begin as the main reason for remaining uninvolved, making it the leading cause for their inactivity. Additionally, 40% of Gen Z crypto investors report that they don’t fully grasp crypto. Or, as Rienzo expressed, “I understand that Bitcoin exists, but I’m uncertain about what type of thing it truly is.”
What Generation Z Need?
In general, Gen Z significantly surpasses earlier generations regarding financial literacy at the same age. If anything, they might actually be progressing too quickly and excessively independently.
Schaefer suggests that the vast amount of information accessible may create a misleading sense of safety. “You can search for any information regarding a financial plan on Google, but Google cannot create a personal financial plan for you,” he stated. “My suggestion is to take your time, assess your current situation, and seek assistance in creating a plan for your desired destination.”
Methodology
The survey was conducted using an opt-in, online self-administered questionnaire from January 27 to February 7, 2022, targeting 4,000 U.S. adults, with 1,000 participants from each of these generations: Generation Z (18-25), millennials (26-41), Generation X (42-57), and baby boomers (58-76). Quotas and data weighting were implemented to guarantee representation of race/ethnicity, gender, region, and income both overall and within each generation.
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