It’s clear that Gen Z has a lot of aspirations, financially. At the same time, earning money and saving it is quite difficult. According to Yahoo News, 26% of the generation maintain $500, at most, in their bank accounts. Compared to millennials and Gen X earners, Gen Z folks maintain the least amount of money on average.
While the numbers appear low, it’s better than nothing according to financial experts.
Sacha Ferrandi, founder of Source Capital Funding in San Diego said, “While there is no ‘right’ amount of money to keep in your checking account, you should keep enough to cover bills and expenses for at least two months if you can. You should also keep enough in your checking account to cover any automatic payments like your mortgage or rent, bills, car payments and more.”
Having any kind of money in bank accounts generally leaves a lot less risk for those who earn it. This is because maintaining a bank account can give several benefits as opposed to not having any kind of open account.
“There are several risks to not having a bank account at all. For one, you limit your access to financial services and will have difficulty building credit and tracking your expenses. No bank account may also mean higher fees for financial transactions. Alternative financial services like payday lenders or check cashing stores charge high fees for their services, whereas with a bank, much of these processes go free of charge. Without an account, you also have lowered security — with a bank, your funds and assets are protected by the FDIC. Without an account, you’re left without options should something happen to your money,” Ferrandi added.
The lack of knowledge surrounding these financial tools and resources is a significant factor as to why younger people have less money on hand. Financial literacy is something that people have to go out of their way to learn as opposed to being introduced to it on an institutional level.
Another factor is the emergence and establishment of bank alternatives like neo-banks and investment apps.
Aurelie Biehler, CEO of Memoria and a former financial expert with Morgan Stanley said, “These platforms may not offer the same savings and investment opportunities as traditional banks, which could limit young adults’ ability to grow their savings over time. It is crucial for young adults to prioritize financial literacy and develop a solid financial plan that includes both traditional and alternative financial tools to help them achieve their long-term financial goals.”
Overall, it would benefit anyone who earns money in this day and age to look into how money works in our society. There are many resources that are obscure due to the lack of attention and discussion surrounding financial literacy.