Generation Z has Money on its Mind

By Kristin McGrath

June 27, 2012

Generation Y, aka the Millennial generation (those born after 1980), often finds itself in the spotlight when it comes to research and blogs. Yet the next generation — Generation Z — is coming of age. Because Generation Z encompasses young people between the ages of 13 and 22, it’s pretty much the Recession generation. These are kids who grew up during one of the darkest economic times in recent history.

So did the Great Recession mold their attitudes toward money? Will they be a generation of savers or a generation of spendthrifts? A recent survey from TD Ameritrade has some interesting insights. It looked at Generation Z’s money worries, spending behaviors and saving habits. It also asked parents of those in Generation Z to try to remember what their money priorities were when they were their children’s age.

Some findings:

Some things never change: When asked what their top financial concerns were, members of Generation Z and their parents rated affording college and having a large student loan balance among their top worries. Generation Z might have inherited these worries from watching their own parents struggle with student loans. According to the survey, 43 percent of Generation Z’s parents are still paying off their student loans.
Generation Z less carefree?: Both Generation Z and their parents were given a list of financial concerns (like student loans, identity theft, the ability to buy a home and the ability to afford health care). Generation Z members were asked to pick those that they found most worrisome. The parents, meanwhile, were asked to rate how worried they were about these things when they were their children’s age. The top concern for Generation Z parents was affording college. For Generation Z, the top concern was having their identity stolen.Yet one of the options on the list was “Not concerned about anything.” While 37 percent of the parents chose this option, just 16 percent of their children did.
A generation of savers: Generation Z has good saving intentions. Seventy-six percent of the Generation Z participants said that saving money is important. But do they follow through on their good intentions? A good chunk of them might. More than half said that if they were to get $500 today, they’d save it. Just under one-third would spend it.
Already worried about jobs: Gen Z-ers and their parents were asked to name their biggest concerns about the economy. Although much of Generation Z is too young to be employed, 26 percent of them cited unemployment as their top concern, nearly matching the percentage of their parents (25 percent) who said the same.
Already on the path to credit card debt: Those on the older end of the Generation Z spectrum are legally able to have their own credit cards. But are they using them responsibly? Thirty-six percent of Generation Z participants said they knew their credit scores. Half know what a credit score is but haven’t checked their own. Meanwhile, 14 percent of Generation Z-ers who use credit do not know their credit scores.The most concerning credit behavior among Generation Z is its willingness to carry a balance. More than half carry a balance for six months or more out of the year.

How did you handle money when you were Generation Z’s age? I was obsessed with saving. I earned money from chores (and, later, part-time jobs) and squirreled it away. I didn’t swipe my first credit card until well after I was out of college (the “emergency” card my parents made me an authorized user on was an intimidating piece of plastic I did not touch). At the same time, my childhood was untouched by the Recession — so I didn’t have to grow up financially until I had to. This next generation had to see its parents struggle and is now graduating into a world with a job shortage. I wish them the best.

With making the most of financial challenges in mind, here are the best personal finance blog posts of the week:

Mint.com examines why many parents are more willing to talk with kids about drugs than about money.

Budgets are Sexy takes a closer look at those expenses that sneak into your budget.

WiseBread explains how to be frugal without becoming a hermit.

Sweating the Big Stuff wonders whether giving kids an allowance really gives them good money habits.

Sustainable Personal Finance tells you why you really don’t want to keep up with the Joneses.

20′s Finances tallies up the cost of moving.


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