Why there’s financial hope for Gen Z

May 31, 2024, 6:00 AM

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SALT LAKE CITY — We’re living in financially stressful times, especially for the members of Generation Z.  But a Utah financial planner says there are a lot of reasons to stay hopeful.

One of the biggest reasons for hope, said Shane Stewart with Deseret Mutual Benefit Administrators, is the cyclical nature of the economy.

“I’ve seen it before. I’ve seen it many times as a student of economic history … our experience has been that it works out. It’s cyclical,” Stewart said. “So it means it looks bad now, wait a month wait two months.”

But that’s not to say that Gen Z doesn’t have specific challenges. Namely, entering the job market during a period of high inflation. Gen Z is likely underemployed, he said, even if they find a place to work they are likely working side gigs while going to school. 

Related: What Utah’s Gen Z leaders are working toward

“Many generations had to do that,” Stewart said. “What is unique to them, is that they’re doing that in an inflationary period …  and that’s taking a toll on their ability to live without some credit. So we’re seeing the credit numbers go up.” 

But even that is not unique to Gen Z.

“Anybody who was 20 something in 1978 or 1993 [or] any inflationary period, they had that happen to them as well,” he said.

What can Gen Z do?

The financial website The Ascent reports a majority of Zoomers (members of Generation Z) stress three or more times a week over money, and often choose to just ignore their finances.

That’s not what Stewart recommends.

Related: A look at the Gen Z housing struggle

Having a savings account and investments, limiting debt and increasing earning power will help anybody stay in a better position when the economy turns around.

“The first thing they can do is focus on their income … meaning, be more employable in jobs that pay more. Next, manage your finances such that you don’t fall into the trap of, ‘Well, I want that, so I better spend on credit.'”

Gen Z and inflation

Stewart says that wages not keeping up with inflation is one of the worries for Gen Z. But he said they are well-poised to move out of that situation, too.

Inflation can erode purchasing power … but getting (job) experience and education will do wonders for them,” Stewart said. “They’re actually in a unique position to not only keep up with inflation, but probably, if done correctly, outpace it for 20 years.”

Stress over home ownership 

The latest American Opportunity Survey from McKinsey and Company found that nearly 60% of Gen Z respondents didn’t think they’d be able to own a home. Stewart said that feeling will probably change.

Related: Study reveals American political media consumption trends, attitudes

“The good news for Gen Z is that markets and economies are cyclical,” he said. “They’re likely to be (in their) late 20s, (or) early 30s before they’re in a position to buy a home. By then things should have changed for the better.”

The report also shows nearly a quarter of Zoomers don’t think they’ll be able to retire, or receive Social Security. He said the best way to approach the unknown is to control that which you can control.

And that’s your contribution to and your management of your retirement accounts,” he said. “Then if you have social security great, it’s gravy on top.”

Saving money

One of the best things Zoomers can do is to save something – even a little bit every month.  Over time, he said, that will add up.

“That person who’s saving a little for 10 years will always be ahead of the person who saves a lot more later. We call it the ‘cost of waiting,'” Stewart said.

He said Gen Z should save a little all the time.

“Do it now because you won’t regret starting as soon as possible,” he said.

Credit cards

Another report indicates the members of Gen Z owe an average of nearly $3,000 on credit cards. The report published by the Wall Street Journal shows Zoomers owe about 25% more on their cards than millennials.

“I just gave this advice to my 21-year-old daughter who came to me saying she needed to get a credit card to establish credit,” Stewart said.

He told her to:

  • Find the lowest rate you can find.
  • Get a card with a low limit.
  • Commit yourself to treating that card like cash.

The best way to operate a credit card, especially as a Gen Z’er Stewart said, is to treat it like a debit card.

“If you get a low-limit credit card, [at the] best rate, you can … pay it off every month,” he said. “You’re a perfect candidate for a high credit score.”

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Why there’s financial hope for Gen Z