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6 Gen Z Money Fears (and 6 Ways to Confront Them)

Written by
Samantha Rose
Samantha Rose is a personal finance writer covering financial literacy for OppU. Her work focuses on providing hands-on resources for high school and college-age students in addition to their parents and educators.
Read time: 7 min
Updated on July 27, 2023
Young couple with their hands on their chins thinking about their gen Z money fears
Money causes everyone stress, but Generation Z tops the list for financial anxiety.

According to a 2019 Experian survey, Generation Z is anxious about money.

  • 51% of Gen Zers are afraid money issues will prevent them from doing what they want in life
  • 43% are afraid they won’t earn enough money to be happy
  • 37% feel pressure to compete financially with peers
  • 36% feel they will never achieve financial security
  • 35% self-reported poor spending habits
  • 30% believe the system is set up for them to fail financially

But don't worry, there are ways to stand up to these fears. Here's how.

Fear No. 1: Money problems will hold you back

Gen Z is dealing with a lot of debt. In fact, an overwhelming amount of debt seems to be the new standard. But what is an overwhelming amount of debt anyway ⁠— a few thousand dollars? Wrong.

According to new data released by Northwestern Mutual, Gen Z holds an average debt of $14,700. Yikes.

Given their overwhelming amount of debt — namely credit card and student loan debt — it’s no wonder money issues terrify Gen Zers. It’s difficult to envision future financial goals when you’re busy playing catch up.

The Northwestern Mutual data goes on to say Gen Z is goal-oriented, with 81% reporting they have specific goals they want to accomplish in the next five to 10 years.

That’s pretty hard to do when held back by debt. And half of those Gen Zers surveyed said having more money would improve their lives the most.

How to confront it: Live within your means 

Dr. Timothy Wiedman, PHR emeritus of Doane University

[L]ive a lifestyle that's well below your means,” Wiedman said. “[E]ven young, childless, two-income couples — who may have more than $35K in combined student loan debt — cannot justify living [in an expensive house].” Instead young adults should “live well below their means, quickly retire their student loans, and pay off any credit card bills that they'd accumulated getting started in their new professions.

Fear No. 2: Not making enough to be happy

As a young adult, it’s not unusual to ask the big questions, like how to achieve happiness. For many the answer lies in making more money. How much money? Well that is entirely personal. Or is it?

Economists have studied what this magical dollar number to happiness could be. Two economists at Princeton University, Angus Deaton and Daniel Kahneman, suggest that money buys happiness, but only up to $75,000 per year.

Therefore income exceeding $75,000 each year doesn’t really improve one’s day-to-day life as income continues to grow. According to the economists’ findings, “high income buys life satisfaction but not happiness.”

Basically, you don’t need to be rich to be happy, Gen Z.

How to confront it: Find happiness in growth

Robert Forrest, certified financial advisor at RBC Wealth Management

If the amount of money we make is the determining factor in our happiness, then we'll never be happy … Statistically, people stop becoming more happy after they make enough money to meet their monthly obligations. Instead, opt for finding happiness in growth. If you find happiness in growth, then you can always be happy because you can always be growing — circumstances become irrelevant.

Fear No. 3: Feeling pressure to compete financially with peers

Growing up is hard enough without peer pressure and the sway of social media. Adolescence has proven time and again that peer pressure is not only powerful, but it can be debilitating.

There was even a study done showing the effects of peer pressure on one’s financial decision making. James Choi, a finance professor at Yale, found that 401(k) participants who were saving too little saved even less after knowing how much their coworkers were saving. Choi’s paper, “The Effect of Providing Peer Information on Retirement Savings Decisions,” concluded that observing higher peer savings rates decreased one’s own savings.

“These people got discouraged and demoralized to see how far behind their peers they were. They just disengaged,” Choi said to Kiplinger, a business and personal finance media brand.

How to confront it: Know your priorities

Brilene Faherty, curriculum director at Money Experience

Feeling pressure to compete financially is natural. It’s normal to want nicer, newer things and in today’s world of constant advertising and social media influencers posting 24/7, it’s hard to not think you have to have everything you see there to be happy. This is where it becomes very important to know your priorities and commit to making decisions in line with them.

For example, if adventure is your top priority and taking a trip is what will make you truly happy, when it comes time to buy the hottest new tech device or trendy outfit, take a step back, ask yourself if it gets you closer to your goals or further away. Spending in ways that improve your quality of life and make you happy will relieve the pressure to compete with your peers financially.

Fear No. 4: Financial insecurity

As they are starting their professional careers, Gen Z is failing to focus on the financial literacy cornerstone of saving. In fact, 57% of Gen Z doesn’t know how much money is in their savings account, a recent poll reported.

That’s a huge red flag, considering that an emergency fund is a crucial step to achieving financial security. By having money set aside to weather an unexpected expense, you’re minimizing the risk involved with taking on debt to cover this expense.

Professionals recommend saving at least three to six months’ worth of expenses, although it does vary based on individual financial situations.

How to confront it: Start an emergency fund

Brilene Faherty, curriculum director at Money Experience

If your future financial security is looming in your brain and making you anxious, it’s possible you need to consider bumping it up on your list of priorities now. If you aren’t already, you can start doing things to help prepare yourself for the future, like starting an emergency fund or looking into how much you’re contributing to a 401(k) retirement fund. If you start putting money toward your future now and prioritizing security in an actionable way, it will make you less anxious.

Fear No. 5: Poor spending habits

A 2016 report from Fung Global Retail & Technology found that Gen Zers are spending due to pressures caused by growing up on social media. Social media presents a unique set of pressures that encourages people to spend money on “leisure services,” including dining out, going out, and vacations.

Perhaps Gen Z is aware of their poor spending habits, but helpless in the face of peer pressure to make a change. This would make sense, given the oldest Gen Zer is in their early twenties, and prone to relying on the opinions of their peers when making financial decisions.

In order to give the perception on social media that they are living their best lives, Gen Zers are being pushed to spend haphazardly, possibly outside of their means. This, coupled with financial peer pressure, is a dangerous combo that might lead Gen Z into a cycle of poor spending habits.

How to confront it: Make a change

Robert Forrest, certified financial advisor at RBC Wealth Management

Sometimes it just doesn't hurt badly enough. Any situation that you can tolerate, you will tolerate. Only once these bad spending habits produce results that you cannot tolerate, will you change them. Decide for yourself that your standard is higher than you're currently living. Set the bar high for your life. Freeze your debit card and credit cards in a glass of water if you have to. But make the decision that you're better than your current habits, and then resolve to do whatever it takes to live the life you've chosen.

Fear No. 6: The system is against you

Generation Z will be entering the workforce on the heels of recessionist millennials who have shaken things up by navigating careers and securing stability in the wake of the 2008 financial crisis.

Instead of looking for increased benefits and security, however, generation Z seems to be focused on following their dreams. In fact, 32% of surveyed Gen Zers stated their greatest aspiration is to be in their dream job within the next 10 years.

Will they follow in the path of millennials who view the government cynically and believe the system is flawed? Time will tell.

How to confront it: Make a money plan

Mitchell Walker, co-creator and author of the PouchPlan Budget book

It is sad but true that many of the institutions and entities that should be helping individuals achieve financial wellbeing are much more concerned about their own financial gain. I'm mainly talking about government and education. They are putting all of us, especially Gen Z, in deep doo-doo.

Most people do not even have a plan for how they are going to spend this week's paycheck. If you do not have some kind of money plan, then you really are not in the fight. However, if you have a plan that is doable, repeatable, and produces the results you want, it is possible to win against all of them.

If you don't have a plan for your money, rest assured that lots of others do. And their plan will trump your 'no plan' every time.

Bottom Line

Generation Z is terrified about their finances, according to some harrowing data from Experian’s new survey. But like most fears, these too can be overcome.


Article contributors

Brilene Faherty is a former financial advisor and current curriculum director at Money Experience, a financial education company that engages people in their own financial lives by focusing on personal priorities and quality of life. Faherty brings true passion and experience to her role and has personally volunteered to teach Money Experience courses at Girls Inc. of Lynn, MA, and for high school students in her native Quincy, MA. She is proud to be part of the movement to increase financial literacy nationwide.

Robert Forrest began his career in the financial services industry in 2014 after an intensive two-year faith-based leadership training and a year serving in college ministry. He currently holds the Series 6, 63, 65, and 7 securities licenses as well as life and health insurance licenses. Forrest’s primary responsibilities with the Jacobitz Wealth Management Group relate to comprehensive wealth planning.

Mitchell Walker is the creator and author of the PouchPlan Budget system. After spending 15 years as a chief financial officer (CFO) of a Berkshire Hathaway company, 11 years as a partner in a public tax practice, owning multiple businesses, serving as CFO of a college and as County Commissioner and City Councilman, Mitchell reveals why the personal side of money is often the most neglected (but most important) thing to get right. Mitchell was deep in debt and his finances were a mess, when the love of his life came on the scene. He had to figure out new ways to make money work for him and fast. He enjoys sharing how getting money right makes life much easier.

Timothy Wiedman

Dr. Timothy Wiedman spent 13 years in operations management working for two different Fortune 1000 companies. Dr. Wiedman spent the next 28 years teaching college courses in management and human resources. He holds two graduate business degrees, earned a professional certification in financial planning at Old Dominion University, and has taught a college course on personal finance.

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