(Photo: Getty Images)
Chicago — A changing economic atmosphere has made it harder for younger people to save money, pricing them and many Americans out of homeownership. But Gen Z have already begun to show concern for their finances.
The generation has been taking steps to build wealth sooner than earlier generations despite unique challenges, according to CNBC.
According to a 2019 study from Next Gen Personal Finance, 33% of high school students have their own bank account and 34% of them share one with a parent. A higher percentage of Gen Zers have already begun investing when compared to Millennials when they were the same age, said Lowell Ricketts, a data scientist from the Institute of Economic Equity at the Federal Reserve Bank of St. Louis.
“In 2019, around 27 to 28% of Gen Zers had some exposure to equities through holding a stock or through retirement accounts,” Ricketts explained. “That percentage is much higher than that of other generations. When millennials were the same age back in 2004, just 18.7% of them had some exposure to equities.”
Though millennials had more money in the market, Ricketts said, some investing exposure is better than none. A factor contributing to that exposure could be the rise of accessible investment platforms like Robinhood. The technology may allow Gen Zers to have more opportunities to build wealth compared to previous generations.
And as the generation starts investing sooner, they may have more time on their side, which is important to allow one to reap the benefit of compound interest. The more time an investment has to grow, the larger it will become.
Also, Gen Zers have already begun saving for retirement. According to the 2021 21st Annual Transamerica Retirement Survey, 70% surveyed have begun saving for retirement at the median age of 19. The median age millennials began saving for retirement is 25. Gen X’ers and Boomers didn’t start saving until 30 to 35 years old.
Though it may be too early to tell if Gen Z stands to become the wealthiest generation, they’re exposure to the stock market and early retirement savings are significant factors that allow them to accumulate wealth over time, according to CNBC.