The creation of wealth on the minds of Gen Z earlier than other generations
The changing economic climate has made it more difficult for young people to save money, which has resulted in homeownership for them and many Americans. But Gen Z has already started to worry about their finances.
The generation took steps to build wealth earlier than previous generations despite unique challenges, according to CNBC.
According to a 2019 study by 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 Z have already started investing compared to Millennials when they were the same age, said Lowell Ricketts, a data scientist at the Institute of Economic Equity at the Federal Reserve Bank of St. Louis.
“In 2019, around 27-28% of Gen Z had some exposure to stocks by owning stocks or through retirement accounts,” Ricketts explained. “This percentage is much higher than that of other generations. When millennials were the same age in 2004, only 18.7% of them had some exposure to stocks. “
Although Millennials have more money in the market, Ricketts said, some investment exposure is better than nothing. One factor contributing to this exposure could be the rise of accessible investment platforms like Robinhood. Technology can allow Gen Z to have more opportunities to build wealth compared to previous generations.
And as the generation starts investing earlier, they can have more time on their side, which is important to allow for the benefit of compound interest. The longer an investment has to grow, the more important it will become.
Plus, Gen Z has already started saving for retirement. According to the 21st Annual Transamerica Retirement Survey of 2021, 70% of respondents started saving for their retirement at the median age of 19. The median age of millennials who started saving for retirement is 25. 35 years.
While it may be too early to tell if Gen Z will become the richest generation, they are exposed to the stock market and saving for early retirement is an important factor in building wealth in the future. over time, according to CNBC.