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Want to Achieve Financial Wellness? Millennials and Gen Z-ers Should Avoid These Mistakes


While markets have boomed over the past 10 years, a recent study by PricewaterhouseCoopers shows that Millennials and Gen Z-ers have been experiencing considerable financial strain. This includes significant decreases in household income as well as difficulties paying for household expenses. As a result, people are turning to less-than-ideal methods of making ends meet, such as taking payday loans and postponing retirement. If you’re having trouble managing your finances, it may be a good idea for you to work with a financial advisor. An advisor may be able to help with budgeting, investing and saving for retirement. Consider using SmartAsset’s free financial advisor tool to find advisors that serve your area today.

What Does the Study Say?

PricewaterhouseCoopers (PWC) recently conducted an Employee Financial Wellness Survey of 1,600 full-time employed U.S. adults. PWC has been conducting this study every year for approximately the last decade. This year, the study showed some troubling results.

Overall, PWC found that financial stress has increased for 63% of its employees since the start of the pandemic. These employees are four times as likely to have experienced an overall decrease in household income and are four times as likely to have trouble making ends meet for basic household expenses.

More specifically, the study found that a whopping 72% of Millennials and 68% of Gen Z-ers are experiencing increased financial stress due to the pandemic. Those numbers are both considerably above the overall average of 63%.

What Are People Doing to Make Ends Meet?

millennials and gen z financial mistakes

The fact that well over half of all employees surveyed have experienced an increase in financial stress since the start of the pandemic is troubling by itself. But the way that these employees are responding may be even more cause for concern.

The PWC survey revealed that employees who have experienced an increase in financial stress are more likely to make certain financial decisions that are traditionally unadvisable. In fact, financially stressed employees surveyed were twice as likely to have used a payday loan or payday advance in the past year and twice as likely to have taken a distribution or loan from their retirement accounts.

These employees are also twice as likely to have considered postponing retirement, which is an interesting move considering that Millennials and Gen Z-ers aren’t typically anywhere near retirement. This signals that many of these employees anticipate hard times for a long time to come.

Why Is There So Much Financial Stress?

As noted, the COVID-19 pandemic is a major factor in much of the financial stress reported in the PWC survey and study. In fact, finances were the top cause of employee stress, more than any other factor. It reasons that as long as the COVID-19 pandemic persists, it will be a major factor in the increase in financial stress.

Another reason for this increase in financial stress may have something to do with large increases in household debt. A 2021 study by the New York Federal Reserve showed that total household debt sits at $15.58 trillion, the highest on record. With household debt often being closely tied to financial stress, it’s easy to understand why more Americans might be feeling underwater with their finances.

What to Do If You’re Under Financial Stress

If you’re a Millennials or Gen Z-er who is under financial stress for any reason, don’t give up hope. Just because you’re experiencing this stress now doesn’t mean that you’ll be feeling it forever. Plus, as a Millennial or Gen Z-er, you have more time than older generations to plan for retirement, so you probably don’t need to put your retirement plans on ice just yet

Financial stress is common, and it can certainly lead to suboptimal decision-making. Even if you’re in a crunch, taking penalties by borrowing from retirement accounts or taking out high interest payday loans usually aren’t the best options.

Instead, it’s a good idea to take a step back and reevaluate your financial situation. The budget that worked for you pre-pandemic or even mid-pandemic might not work today, and it’s O.K. to create a new one even if the old one has worked in the past. You may decide to dedicate less money to investments and saving in order to cover bills. These decisions don’t have to be permanent, but they can keep you away from things like taking payday loans.

You also may want to consider working with a financial planner. In the thick of financial stress, it can sometimes be difficult to think about how to make a change. An outside perspective can be extremely useful, even if you just work with a professional a handful of times. If you decide this may be the right answer for you, try using SmartAsset’s free advisor matching tool.

Bottom Line

millennials and gen z financial mistakes

For many Americans, especially Millennials and Gen Z-ers, times have been tough lately. Stagnant wages and the COVID-19 pandemic have made it so that many people are having trouble making ends meet. As a result, more and more people are turning to less than optimal methods of making ends meet, such as payday loans and taking early loans from retirement accounts. However, if you’re having a tough time managing your finances lately, there are a number of different things you can do achieve a higher degree of  financial stability.

Tips for Investing

  • Creating an effective investment portfolio can be a difficult endeavor, and it can be a good idea to work with a financial advisor. An advisor may be able to help you balance your portfolio, think of new investments and develop suitable time horizons. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Investing on your own isn’t easy, but if you decide to try building a self-guided portfolio, SmartAsset has you covered. We’ve developed a number of free online resources to help you make sense of your investments. For example, check out our free investment calculator and get started today.

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