They say that before you can love somebody else, you have to learn to love yourself. And one step towards doing that is to make more healthy choices, including ones about your finances. Recent consumer research from Laurel Road looked to understand the impact of the COVID-19 pandemic and 2020 as a whole, on millennials and Gen-Z’s personal finances and what they found was that these younger generations are caught in a bad romance. The survey uncovered both interesting differences, and similarities, between the two when it comes to their financial upkeep, knowledge and wellbeing.
Gen-Z Aren’t in Love with Budgeting
When it comes to budgeting, 11% of Gen-Z don’t do it at all, compared to 7% of millennials. Gen-Z also spends less time using budgeting tools than their millennial counterparts:
- Personal finance apps: 22% of Gen-Z use personal finance apps, compared to 42% of millennials.
- Digital spreadsheets: the survey found that a fifth (19%) of Gen-Zers use digital spreadsheets versus a third (32%) of millennials.
- Savings accounts: while moving a set amount of each paycheck into a savings account is the most popular way to budget for Gen-Z, only 35% use this method, compared to 44% of millennials.
Not surprisingly, Gen-Zers were found to be less confident about their budgeting capabilities than millennials; a little over half (53%) of Gen-Z believe they can improve their budgeting skills but don’t know how, versus two-thirds (66%) of millennials.
Millennials Prioritize Romancing Their Student Loans
Managing your student loans can be challenging. During the pandemic, 48% of millennials refinanced and consolidated their student loans compared to 31% of Gen-Z.
The survey found that half (48%) of Gen-Z did not know the difference between refinancing and consolidating student loans versus 36% of millennials. Similarly, 32% of Gen-Z were aware of the federal student loan forbearance period before taking the survey compared to 42% of millennials.
The biggest difference between the two groups was found in their future plans for student loan management in 2021. Of those with student loans, over half (55%) of millennials plan to pay off more of their student loans this year while one-third (34%) of Gen-Z expects to do the same.
Gen-Z and Millennials Make Short-term Sacrifices for Their Wallets — Within Limits
The survey found that millennials and Gen-Z have a similar mindset when it comes to financial priorities. Both generations pulled back spending on similar expenses during the pandemic, noting they’d saved the most money during quarantine by not going to the movies (29% of millennials, 32% of Gen-Z) and eating out at restaurants less frequently (31% of millennials, 33% of Gen-Z).
However, neither group was willing to compromise on personal needs, as they increased spending on personal wellness (35% of millennials, 29% of Gen-Z) and quality time with family and friends (31% of millennials, 29% of Gen-Z).
Finally, while millennials and Gen-Z differ on budgeting, both appreciate the importance of building savings. When asked what they’d do with an extra $1,000, 37% of millennials and 39% of Gen-Z said they would put the money into a savings account. Perhaps, this is a sign of a budding love affair.
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