Every generation has its own approach to personal finance. Millennials think about money differently than baby boomers, and zoomers (Generation Z) are rethinking the millennial approach to personal finance.
In the past, younger people would take on summer jobs or babysit to save up some money until they got a job that came with a more formal retirement account like a 401(k). Today, kids are growing up online and using this to their financial advantage. They easily use platforms like YouTube, Instagram, and TikTok to launch businesses or secure meaningful side gigs. Moreover, this generation is investing at earlier ages than prior ones and in newer options like cryptocurrency. Meanwhile, terms like “non-fungible token” have become a part of their everyday vocabulary.
Generation Z has already seen its fair share of financial disasters. Zoomers grew up during the 2007 financial crisis, and more recently, have experienced the recession caused by the COVID-19 pandemic. In this setting, Zoomers seem intent on creating their own money rules. However, they also approach making money with a new sensibility and a focus on the ethics of companies they support.
There are countless stories of Gen Z entrepreneurs using the Internet to launch successful and ethically sound companies at young ages. The question that many people are asking, however, is whether this type of entrepreneurship will last or if it is just a reaction to the post-pandemic financial environment. Because of the unique situation this generation is in, it would be hard to imagine that this approach to entrepreneurship is not here to stay.
Seeking out Education through Online Resources
Zoomers are experiencing a unique upbringing due in part to the sheer amount of information and education that is available to them online. This generation quickly turns to YouTube for financial guidance and advice, which means that members are investing at young ages and teaching themselves about indexes, dollar-cost averaging, and more to fill in the gaps in their education.
Early Gen Z investors credit YouTube with their success, recognizing they would have had no other easily accessible way to learn about these processes. Through social media, people have access to knowledgeable mentors and peers to bounce ideas off of. Furthermore, zoomers have begun opening brokerage accounts as soon as they turn 18, which gives them the potential to accumulate massive wealth throughout their lives. While many members of Gen Z are using their social media accounts to make money, they also see these networks as a source of information and guidance when making important financial decisions.
The connectivity of Generation Z remains one of the driving factors of this new approach to personal finance. Historically, investing has been the domain of businesspeople on Wall Street, but this is no longer the case. Many young and diverse influencers have reached out to teach their peers and serve as a resource. This makes investing feel much more natural and accessible. Gen Z puts a massive emphasis on authenticity, and the Internet has made it possible to connect in ways that undermine historic approaches to investment. Now, investment is a social thing. This is an important development considering that Gen Z is the most racially and ethnically diverse generation in history, and zoomers are already having important conversations about the intersection of race and money.
Creating Financial Community through Social Media
Perhaps the best example for understanding the social nature of investing for Generation Z is the recent GameStop phenomenon. Reddit fueled one of the largest and most unexpected stock comebacks in history, with it showing the power that people have over financial markets. People feel more empowered than ever before to invest and to do so in a way that is socially responsible rather than dictated by market trends.
More members of Gen Z are getting involved with investing, especially amid the pandemic. For example, Apex Clearing is a platform that facilitates trades for brokerages. In the last two years, the number of Gen Z accounts on the platform have increased 10 times over. Moreover, a recent survey found that 46 percent of Gen Z respondents said they sought out personal finance education on social media.
Zoomers are also giving back to the communities they lean on for information and guidance. For example, one 17-year-old learned about cryptocurrency using Twitter and YouTube. They created a new YouTube channel that gained more than 1,000 subscribers within five months. This channel focuses on personal finance questions specifically for younger individuals. For example, videos talk about how young drivers can get the cheapest health insurance and how to create a credit history if you’re under 18. Meanwhile, a 19-year-old focused on making cryptocurrency more accessible has already sold one company, Ambo, which is a sort of mobile wallet for holding and tracking these investments. Already, this Gen Z entrepreneur has spearheaded a new cryptocurrency company.