Money Lessons Zoomers Can Learn From Millennials:
It’s no secret that millennials (born between 1981 and 1996) have inherited difficult financial circumstances. Here’s what Generation Z can learn from an older generation.
It’s no secret that millennials (born between 1981 and 1996) have inherited difficult financial circumstances.
Millennials, formed during the Great Recession, faced rising costs of basic expenses such as housing, education, and health care, and struggled with sluggish wage growth, a diminished social safety net, and an uncertain financial future.
Generation Z Zoomers are about to inherit many of the same problems, along with some new ones, such as dealing with a single pandemic. Whichever side of the generation gap they are on, young people face the same financial challenges, which are worth considering how millennials have fared and how their experience could impact Generation Z in the future.
1. Income parity on the rise
One of the biggest factors influencing the financial health of Generation Y and Generation Z is the increase in income equality. According to the Economic Policy Institute, net productivity increased by 69.6% from 1979 to 2018, while hourly wages rose by only 11.6% after adjusting for inflation.
Meanwhile, the wealth gap between wealth and property in America only doubled between 1989 and 2016. According to Pew Research, in 2016 the richest 5% owned 248 times the median wealth. Since wealth is higher and wages stagnate, it can be difficult to reach corners.
While it affects people of all ages who are not among the wealthiest, it mainly affects young people who have spent their entire careers with slow wage growth.
2. The cost of living is rising
Basic spending is getting more expensive and this is affecting the finances of Millennials and Zoomer. For example, according to a report by Super Money, house prices have risen by 39% in the past 45 years, while the income of young people between the ages of 25 and 34 has stagnated. Childcare costs have also skyrocketed, with the average annual childcare cost for a single child in 2018 at $8,700.
These rising costs make it difficult for young people to get ahead. As a result, many millennial kids have been putting off kids, which even 20-year-old zoom users should consider.
3. Avoid Credit Card Debt (Use Credit Cards)
In tough times, it’s easy to put basic spending on a credit card and expect things to get better in the future. However, if you build up significant debt, it can become increasingly difficult to get rid of due to rising interest rates. If possible, try to avoid credit card debt, even if it means controlling spending and living on a tight budget.
Just because you should avoid credit card debt doesn’t mean you should avoid credit cards. There are many ways to reward your credit card so that you can make money (who doesn’t want to give up!?) with your everyday expenses. As long as you use your credit cards responsibly and pay your full balance each month, this is a great way to earn extra money from your everyday expenses.
4. Study loans are not sustainable
The cost of higher education has also risen dramatically, without gradually increasing salaries. While members of previous generations could finance their education by getting part-time or summer jobs, millennials who prefer higher education often study with thousands of dollars in student loans.
In recent years, there has been increasing support for student debt cancellation and free public colleges, which will help cover the rising cost of education. Not everyone goes to university just because they have a good financial idea: many do so to pursue their studies or pursue a career in profitable but low-income regions. Education is indispensable regardless of the price of the sticker.
That said, Zoomers would do well to learn from millennials and consider the weight of student loans to determine their future.
5. Careers do not always have clear jobs
Previous generations had reasonable expectations of organic career advancement. In theory, your employer will reward you with promotions and promotions if you have done the job and can advance your entire career.
This is not always the case today. Millennials are more likely than previous generations to move from one job to another in different businesses, rather than staying with an employer for most of their careers. However, this is not because millennials are fickle; this is because changing jobs is now one of the most effective ways to increase your income. For Generation Z degrees, they need to be realistic about their long-term plans and understand that the quantum leap is sometimes a necessity.
Generation Z is in many ways the same as Millennials when it comes to personal finance. Many of the strategies that millennials have learned from experience, such as reducing debt and maximizing savings, are good strategies for using people of all ages.
Viral gene. Y and genl. Together, they form a powerful coalition that can work to address many of the challenges facing the world today.