Gen Z and Millennials are Desperate for Financial Advice

Posted on Monday 18 October 2021

Gen Z and Millennials are Desperate for Financial Advice

Financial advice is crucial at any age, but particularly in your formative years. For Gen Z and millennials, that time is now!

Younger millennials are in their late twenties and early thirties, while the oldest members of Gen Z are 24. Far from being the carefree, avocado-toast aficionados that they once were portrayed as, the oldest millennials are on the cusp of turning forty this year. They’ve lived through some massive financial (and technological) shifts firsthand, most notably the housing market crash of 2008 and resulting recession.

On the other hand, Gen Z is fresh out of the gate as the youngest generation, perhaps best known for embracing the full breadth of technology and internet. (And really, who could blame them – after all, they’ve never known life without the internet at their fingertips!)

Though there’s as many as two decades between millennials and Gen Z, there are plenty of similarities between these two generations in terms of learning how to manage their personal finances. Where millennials had to live with the repercussions of an overseas war after 9/11 and the housing bubble, Gen Z is learning about personal finances during the after-effects of a global pandemic.

Not surprisingly, that brings massive swings in the housing, employment, and investment markets – and no real sense of what happens next. They are also more aware of what payday loans are which makes this group the most financially aware yet.

With so much financial uncertainty, how do millennials and Gen Z get their financial advice (if they’re getting it at all)? What does managing personal finances mean for these younger generations of consumers? Let’s take a look at the best ways for Gen Z and millennials to learn about making, holding onto, and growing their financial health.

Going digital for financial advice

When it comes to investing, younger consumers definitely favor going digital. And financial services companies are taking note: for instance, Vanguard released a digital-only financial advice service catering to younger investors. Two-thirds of users are either millennials or Gen Z.

Similarly, robo-advisors like Wealthsimple put investing and money management at the tip of your fingers through an app. Because robo-advisors make investments for you, they’re a great way for millennials and Gen Z to let their money grow without needing to get in the weeds with understanding the stock market.

Even better, investors don’t need to get on the phone or sit down face-to-face with a financial advisor – simply open the app, and within a few clicks, your finances are ready and waiting, 24/7. (Introverts rejoice!)

Online platforms like Wealthsimple take it one step further by offering instant money transfers between users, free of charge. It’s a one-stop-shop that offers investing, transfers, and advice on how to invest, how to save, and even how to buy a home.

It’s hard to deny the ease and convenience of managing your finances through a platform that is accessible 24/7 through your smartphone. And getting financial advice from a real-life human just isn’t as important to Gen Z and millennials, which has played a big role in the shift to digital financial advice and money management.

Social media in full swing

Millennials may be old enough to remember a time without social media, but they also came of age during the boom of social media platform giants like Facebook and Myspace (R.I.P.). No longer a place solely for recipes and catalogues, millennials quickly adapted to and embraced the all-encompassing presence of the internet.

And for Gen Z, there has never been a time without the internet. Phones have always been smart (never flipped), influencers are everywhere, and social media has always been a powerful part of their identity and relationships.

It’s hardly surprising that social media is a driving source of financial advice for both generations. And while millennials might prefer a more classic platform (like Facebook) while Gen Z is quicker to latch onto newer platforms (like Snapchat), both generations share a passion for finding financial advice via videos, influencers, comment threads, and shared articles.

According to 2021 survey data, the top social media platforms that millennials and Gen Z use for financial advice include:

  • TikTok
  • Instagram
  • Snapchat
  • Facebook
  • Twitter

While certain platforms are certainly more popular for one generation than the other, the vast majority of survey respondents (75 percent) report that they use social media to follow specific content creators who focus on financial topics. The most popular financial topics for Gen Z and millennials include:

  • Budgeting
  • Taxes
  • Credit card debt
  • Credit card points and rewards
  • Investing
  • Buying a home
  • Bank accounts and credit cards
  • Car insurance
  • Cryptocurrency
  • Student loans
  • Retirement

Why is financial advice so important for millennials?

Millennials face a unique challenge in learning how to manage their personal finances. While certainly not true for each and every member of this generation, the vast majority of millennials grew up without financial literacy.

In fact, in a recent study by the Global Financial Literacy Excellence Center, only 24 percent of respondents demonstrated basic knowledge of financial concepts like investments and inflation. To add insult to injury, almost 30 percent were overdrawing on their checking accounts.

Student loan debt is perhaps the biggest financial challenge that millennials face. In 2019, more than 60 percent of student debt insolvencies in Canada were filed by millennials. And with the average student loan debt at more than $26,000, it’s not hard to see why millennials are strapped for cash (and financial advice).

Why is financial advice so important for Gen Z?

Gen Z has always known unprecedented access to financial advice, tools, and platforms. And the rising prevalence of digital-only financial management has made it easier than ever for young adults to gain financial literacy. But without the right guidance, Gen Z is at risk of suffering from the same financial challenges as millennials.

COVID-19 has thrown a huge wrench in personal finances across the globe – especially when it comes to job security for Gen Z. By April of 2020, nearly 500,000 Canadian workers aged 15 to 24 had lost their jobs. That’s a huge hit for the younger generation, particularly during a time that should be focused on exposing young adults to financial best practices, in turn setting good habits that will carry them through the rest of their lives.

For young Canadians, the unemployment crisis extends to crucial career-building elements like internships, study abroad programs, and work placements. And even more concerning is that coming of age during a recession will have an impact on the types of wages that Gen Z workers earn. On average, wages will likely stagnate for 15 years – which will have its own ripple effects in housing, living, and working for an entire generation.

Although millennials and Gen Z both have a big mountain to climb, there are plenty of opportunities out there for great financial advice. Though COVID-19 has thrown no shortage of wrenches, there is one small consolation: if any generations are ready for extreme financial changes and technology moving at the speed of light, it’s Gen Z and millennials – by a landslide!