Facing a challenging economy and rising levels of student debt, Gen-Z is in dire need of financial assistance. Unfortunately, a higher paycheck alone won’t help them get ahead.
Financial literacy programs can provide Gen Z with the tools and skills they need to make responsible financial decisions rather than repeating the same mistakes made by their parents' and grandparents’ generations.
Understanding how these programs work and how they benefit young adults is essential if you want to financially empower the next generation. Read on to learn what steps your institution can take to provide Gen Z with the financial literacy skills they need to succeed.
Understanding the Financial Landscape for Gen Z
The economic climate surrounding Gen Z, combined with their upbringing, has greatly impacted the way they approach their finances. Here are a few key differences between Gen Z and past generations:
The Digital Age
Gen Z has been raised in a digital age, where technology and social media play a significant role in their daily lives.
Unlike previous generations who may have relied more on traditional institutions such as banks, this group often seeks out alternative methods of managing their finances. They are more likely to use mobile banking apps or digital wallets, which provide convenience and immediate accessibility.
The Great Recession
Despite what the media may portray, research has shown that Gen Z is known to be focused more on financial security and stability.
They have witnessed the economic downturn caused by the Great Recession and, on average, typically save about a third of their income.1 They tend to be more money-conscious, savings-oriented, and forward-thinking when it comes to personal finance.
Lack of Financial Literacy
However, this tech-savvy generation also faces unique financial challenges due to their lack of experience with managing money.
Many Gen Z individuals were not taught about personal finance in high school or at home, as reports have shown that only a quarter of high schoolers will receive a financial education before graduating.2 This results in a lack of knowledge about important topics, such as 401k or Roth IRA accounts.
As a result of this lack of financial literacy, many members of Gen Z make common mistakes that can hinder their long-term financial success. Though they may be exceptionally thrifty, they may fail to allocate enough money for emergencies or retirement due to a lack of financial literacy.
Parental Money Habits
The impact of parental financial behavior on Gen Z's financial habits is also significant. Research has shown that children learn about money and develop their financial habits from their parents.3
On the other hand, if parents exhibit poor financial habits, such as living beyond their means or consistently making impulsive purchases, it can negatively influence the financial behavior of their Gen Z children. That is why it's so important for parents to model responsible financial behavior for their children.
However, these aren’t the only unique obstacles that stand between Gen Z and financial literacy. The current state of formal education has a large impact on how this generation handles their money – and how they will do so after they finish their time in college.
The Role of Financial Aid Directors in Promoting Financial Literacy
Financial aid directors have a unique position in colleges and universities as they interact with students regularly regarding their tuition fees and expenses. They are well aware of the challenges that college students face when it comes to managing finances.
Over the past 20 years, in-state tuition at public universities has grown by 175%, with out-of-state and private universities following behind at 141% and 134%, respectively.4
Two-thirds of current college students are taking on loans to cover these expenses, adding to the $1.75 trillion total shared by Americans today.5
These students will begin their professional careers with thousands of dollars in debt, whether they like it or not. If they lack the financial education necessary to stay on top of their college debt, Gen Z may have a higher risk of defaulting on these loans.
What Your University Can Do
Fortunately, financial aid directors can bridge this gap in knowledge by helping students understand their finances before they even graduate.
College administrators may offer financial literacy courses, workshops, and classes to ensure students are comfortable with basic personal finance topics. They can also offer guidance on how to effectively manage student loans and explore scholarship opportunities.
Collaboration with other campus resources is key to enhancing the impact of financial education efforts for Gen Z students. Working together with student support services, such as counseling centers or career services, can provide a holistic approach to financial literacy.
- Counseling centers can offer workshops on stress management related to finances.
- Career services can provide guidance on employment opportunities or internships that align with students' future goals while also considering their financial needs.
- Academic advisors can assist students in planning their course loads effectively to ensure timely graduation without unnecessary expenses.
By working together, these departments can create comprehensive programs that address various aspects of college life that impact student finances.
Strategies for Promoting Financial Literacy Among Gen Z
If your institution wants to give Gen Z a permanent boost to their financial well-being, your financial aid department can't step back after one financial literacy course. Your financial education strategy needs to be tailored towards Gen Z and their style of learning.
Luckily, there are several strategies that colleges and universities can implement in order to promote financial literacy among Gen Z students.
Financial Literacy Curriculum
Incorporating financial literacy courses into the curriculum is one effective strategy. These courses should be designed in a way that is engaging and relatable for Gen Z students. Don’t just state that the skills they will learn are important – apply them to their lives to demonstrate their importance.
By offering courses that cover topics such as budgeting, saving, investing, and managing debt, students will gain the necessary knowledge and skills to make informed financial decisions.
Campus Workshops and Seminars
Hosting financial workshops and seminars on campus is another effective method. These events can cover a range of topics, such as creating a personal budget, understanding credit scores, or planning for retirement. Bringing in guest speakers or experts in the field of finance can also provide valuable insights and perspectives.
Tech and Gamification
Utilizing technology and gamification is crucial when it comes to engaging Gen Z students. Mobile apps or online platforms that use gamification techniques to teach financial concepts can be highly effective. In fact, research has shown that applying gamification techniques can increase participation by 100% or more.6
For example, cooperative and competitive activities that demonstrate real-life scenarios related to money management can enhance students’ learning experience. Additionally, utilizing social media platforms to share tips, advice, and success stories can engage and connect with Gen Z students on a platform they are already active on.
Finally, offering one-on-one financial counseling and coaching may be the most important strategy. This personalized approach allows students to receive tailored advice that addresses their specific financial challenges and goals.
Financial aid directors can work with trained professionals or partner with local financial institutions to provide these services.
Creating A Financially Literate Future
Financial literacy is essential for Gen Z as they navigate adulthood in an uncertain economy. It empowers them to make decisions aligned with their goals and values. Financial aid directors play a crucial role in shaping the future by promoting positive financial habits among Gen Z.
To ensure the financial well-being of this generation, financial aid directors should invest in comprehensive programs that provide education and support on college campuses. This will create a financially literate generation capable of thriving in today's complex economic landscape.
By prioritizing these efforts now, financial aid directors can positively impact the future finances of not only this generation but also future generations to come.
Investing in financial literacy programs benefits both individuals and society at large. It is time for financial aid directors to take action and prioritize financial literacy on college campuses.
1 - https://www.bloomberg.com/news/articles/2021-11-17/gen-z-has-360-billion-to-spend-trick-is-getting-them-to-buy#xj4y7vzkg
2 - https://d3f7q2msm2165u.cloudfront.net/aaa-content/user/files/Files/NGPFAnnualReport_2022.pdf
3 - https://michiganross.umich.edu/rtia-articles/new-research-shows-children-form-attitudes-about-money-young-age
4 - https://www.usnews.com/education/best-colleges/paying-for-college/articles/see-20-years-of-tuition-growth-at-national-universities
5 - https://www.weforum.org/agenda/2022/08/americans-owe-1-75-trillion-in-student-debt/
6 - https://www.snipp.com/blog/2017-06-21/the-power-of-gamification-participation-engagement-loyalty