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There are plenty of differences between millennials and Generation Z. Just ask anyone under the age of 40 their opinion on skinny jeans.
That said, millennials (born 1981-1996) do share some qualities with Gen Z (born 1997-2012), thanks to a similar upbringing. Millennials and Gen Z were largely raised by “helicopter parents,” known for overprotecting and overindulging their kids. They were also raised alongside modern technology — including instant and unlimited access to information and social media — with Gen Z being the first fully digitally native generation.
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Millennials and Gen Z also came of age during tumultuous economic times, similar to their parents and grandparents. This means they’ve both inherited a few habits when it comes to money.
One of the biggest shared financial habits that millennials and Gen Z inherited is frugality, according to Starr Wells, owner of personal finance blog A Centsational Life. “Having grandparents who survived the Great Depression and parents who lived through the Great Recession, millennials and Gen Z know all about frugal living,” she said. “Their parents and grandparents lived through hard financial times, therefore passing on their habits of pinching pennies.”
It’s worth noting that many millennials were new adults themselves when the Great Recession hit. In an interesting parallel, older Gen Zers also experienced financial struggle as new adults, with the gig economy taking a major hit during COVID.
According to the World Economic Forum, 72% of Gen Zers say that cost is the most important factor they consider when making a purchase. “Neither millennials or Gen Z like paying full price for anything,” Wells said. “That is why today’s sales tactics thrive from offering small discounts, BOGOs and reward points to make frugal consumers feel as if they are saving money.”
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Knowing the Value of Hard-Earned Money
An essential lesson millennials and Gen Z learned from older generations is the value of earning money and seeking opportunities, according to Steve Wilson, founder of Bankdash. “I remember my parents would give me an allowance, and anything I wanted to buy had to come from that allowance (besides the necessities, of course),” he said. Wilson added that his allowance had to be earned by doing chores and helping out around the house — a common experience among today’s young adults.
As a result, millennials and Gen Z have learned the importance of saving and finding creative ways to make money. When it comes to retirement savings, a study by Charles Schwab found that millennials started saving for retirement in their 20s — about 10 years ahead of baby boomers. Another report by Pew found that as of 2018, they also had higher 401(k) balances than Gen Xers did at the same age. Meanwhile, Gen Zers are socking away a third of their income, on average, favoring saving and investing over spending.
“Looking back at it, I think it’s an immensely valuable habit and helped me become aware of and smart with my finances as I grew up,” Wilson said.
Going to College
“The biggest financial impact that the parents of millennials and Gen Z had on their kids is the emphasis on college education as a path to financial success,” said Melanie Hanson, editor-in-chief of EDI Refinance. She said the biggest jump in college enrollment came when baby boomers first started attending, though it wasn’t until millennials started hitting college age in the late 1990s and early 2000s that college education became the expected path for most students (rather than a good option) for the especially bright ones).
Unfortunately, Hanson noted that this heavy emphasis on college came right as state and federal funding to support tuition started drying up. “The result has been two generations that are vastly more educated, and vastly more indebted, than those that preceded them,” she said.
In 2020, the average US student loan debt averaged about $28,400, according to CollegeBoard data. However, Experian found that millennials average more — about $38,877. Gen Z’s future with student loans is still unknown. However, as the cost of college continues to rise, it’s likely Gen Z will experience many of the same challenges that millennials do today.
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