Despite being one of the most financially overwhelmed generations to date,Gen Zis obsessed with being rich, and this was told by an expertNewsweekwhy that might be.
That's the latest from a new study from Intuit Credit Karma, which found that both Gen Z – born between 1996 and 2012 – and millennials – born between 1981 and 1996 – showed a general obsession with getting rich. The survey's Generation Z respondents reported an obsession with being rich at 44 percent, while millennials were only slightly more likely to be obsessed at 46 percent.
This compares to just 27 percent of the greater U.S. population who are obsessed with being rich.
One thing that may contribute to the problem is that both generations reported “money dysmorphia.” Money dysmorphia is described as a feeling of insecurity about your financial situation, regardless of the reality of your situation, and this was widespread among Generation Z and Millennial respondents, with 43 and 41 percent of each generation reporting this respectively.
Across the board, only 29 percent of 1,000 Americans surveyed reported feeling money dysmorphia, and there seemed to be no connection between the experience and your actual financial situation.
About 37 percent of those with money dysmorphia had more than $10,000 in savings, and 23 percent of them had more than $30,000. The average savings amount in America is just $5,300.
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“Money dysmorphia is a bit like today's version of keeping up with the Joneses,” says Courtney Alev, a consumer finance attorney at Credit Karma. “Many people examine their finances and compare themselves to their peers, people on social media, and even celebrities, which creates feelings of inadequacy. This distortion between perception and reality can prevent people from taking steps to achieve their financial goals.”
A big part of the obsession with being rich also lies in the fact that Generation Z and Millennials face financial challenges that their parents may not have.
From the housing affordability crisis to record student debt, Gen Z and Millennials have not had easy access to the financial life of adulthood. Dreams of becoming rich can arise from this, according to Lindsay Bryan-Podvin, a financial counselor and financial counselor. the founder of Mind Money Balance.
“The intrigue of being rich for Gen Z and millennials can be that even a middle-class lifestyle can seem out of reach,” says Bryan-Podvin.Newsweek. “Reduced housing affordability, reduced student loan debt, and exorbitant childcare costs can legitimately lend themselves to daydreams about having financial security, and 'wealth' can be part of that daydream.”
Many Generation Z and Millennials grew up watching their parents lose large chunks of their wealth due to stock market crashes and housing stocks drying up, Bryan-Podvin said, raising fears of financial instability.
They are also digital natives in a culture ripe with social media comparisons and the constant awareness that those who are wealthier and seemingly “luckier” exist.
“Social media increases people's feelings of money dysmorphia, but it's not like those feelings weren't widespread in previous generations,” says financial planner JP Geisbauer.Newsweek. “Having a vibrating, beeping device in your pocket that alerts you when someone richer than you posts pictures of their pajamas, watch or purse will only exaggerate those feelings.”
Of the entire group struggling with money dysmorphia, 82 percent said they were behind on their finances, 40 percent said the problem kept them from building savings, and 38 percent said it caused them to overspend.
There's also a looming concern that Gen Z and millennials won't be able to have a comfortable retirement, especially since Social Security is expected to dry up by the early 2030s.
“When millennials were born, 65 was considered old age. Today, 65 is considered middle age,” said financial planner and founder of The Strategic Wealth Advisor Nancy Hite.Newsweek. “While many have saved money through their IRAs, 401Ks, and 403b accounts, and are retiring at age 62 or 65, the millennial is now realizing that the savings will not last thirty years. As a result, it is unlikely that they will maintain the desired financial independence.”
Still, for those struggling with money dysmorphia, there are steps you can take. And first you need to take an honest look at your finances, Alev said.
“Set clear goals, make a plan and, most importantly, keep your eyes on your own paper,” Alev said. “If your goal is to build your savings, start with an audit of your finances to see where you can make room for savings in your budget.”
Scheduling automatic payments from each paycheck will also help you stay accountable and increase savings in the long run, Alev said.
Feelings about one's own financial status and wealth may also need to change for millennials and Gen Z in the coming years.
While Generation Z and the Millennials may not be in the best financial situation right now, the groups are in for a massive realignment of their wealth.
Baby boomers have been the richest generation in history, amassing more than half of America's household wealth. But when they die, their children, mostly millennials and some Gen Zers, will own another $84 trillion in wealth.
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Newsweek is committed to challenging conventional wisdom and finding connections in search of common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in search of common ground.
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