In recent years, the urgency for financial literacy and planning has skyrocketed, especially for the young and upcoming generations. A survey conducted by Charles Schwab, one of the largest financial-services firms in America, has found that a significant number of Gen Zers and millennials delay financial planning due to perceived complexities and time constraints. This finding poses an urgent question: How can we encourage younger generations to make financial planning a priority despite the barriers they face?
The survey’s results point towards a looming financial literacy crisis. Approximately two-thirds of the respondents claimed they didn't have a formal financial plan, and a quarter said they didn't have a financial plan at all. Among these respondents, Gen Zers and millennials were considerably more likely than boomers to feel discouraged from making a financial plan due to the perceived time, money, and effort required.
More than a quarter of Gen Z and millennial respondents confessed that creating a financial plan seemed too complicated. 29% claimed they didn't have sufficient time to develop one. These numbers dwarf the 9% of boomer respondents who held the same view. While it's easy to brush these findings off as simple youthful procrastination, the gravity of the situation calls for serious introspection.
The survey also revealed that Gen Zers were less likely to have a financial plan because they hadn't experienced a significant life event, such as having children or buying a property, which would prompt them to create one. However, life is full of unexpected turns, and the absence of a financial plan can lead to grave consequences when faced with an unanticipated expense or loss of income.
The complexity and time-consuming nature of financial planning, as perceived by younger generations, hints at a larger systemic issue – the lack of adequate financial education. It's imperative that we recognize this issue and work towards simplifying financial literacy. This is where tech companies, financial services firms, and policymakers can play a significant role.
Financial education should be more than just an occasional seminar or a brief course during high school or college. It should be integrated into curricula and made mandatory. Schools, colleges, and universities should place greater emphasis on real-world financial skills, such as budgeting, investing, understanding credit, and planning for retirement.
Furthermore, financial services firms should prioritize the simplification of financial planning. They can leverage technology to create user-friendly apps and platforms that demystify financial planning. The goal should be to make financial literacy and planning accessible, straightforward, and less time-consuming for everyone, regardless of their age or previous financial knowledge.
Interestingly, despite their lack of financial planning, younger generations seem to place more value on wealth than older ones. They're influenced by the lifestyles of their friends and family, and being able to afford a similar lifestyle is an indication of wealth for them. This further emphasizes the need for financial planning education, to help younger generations understand the role of saving and investing in building wealth.
The disconnect between the value Gen Zers and millennials place on wealth and their hesitancy towards financial planning is alarming. If left unchecked, we risk creating a generation unprepared to handle financial challenges. It's high time we address this disconnect by making financial education a priority and developing tools that simplify financial planning. If we don't act now, we might be setting up our younger generations for a future filled with financial instability and hardship.
