Yahoo Finance 6 Millennial Money Skills Gen Z Shouldn’t Follow
As Gen Z enters adulthood, there are things they can learn from their generational predecessors which includes what not to do. While many millennial traits are worthwhile, some of their money rules may not be worth following.
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Millennials have had a tough time financially as they inch closer to middle age. Many graduated from college with insurmountable student loan debt. They have seen record-high inflation and have struggled to purchase a home. Along the way, they may have picked up money habits that others may want to stay away from.
GOBankingRates asked financial experts to explain which millennial money skills Gen Z shouldn’t follow. Here were their six recommendations.
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Heavy Reliance on Credit Cards
David Rafalovsky, CEO of Oxygen, said, “A key habit millennials embraced, which Gen Z should reconsider, is the heavy reliance on credit cards. Millennials grew up during a time when credit was readily accessible and often used it to bridge gaps in their finances.”
He continued, “However, this habit can lead to accumulating high-interest debt, a trap Gen Z should avoid. Instead, they should focus on building a strong credit history while prioritizing saving and spending within their means.”
Jared Stern, managing member of Uplift Legal Funding, agreed. “Millennials often use credit cards for daily expenses, leading to high-interest debt. Gen Z should focus on using credit responsibly and building credit without accumulating unnecessary debt,” he said.
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Excessive Spending on Experiences
“Another millennial trend that Gen Z might want to sidestep,” said Rafalovsky, “is the ‘experience over material goods’ mindset. While valuing experiences isn’t inherently negative, it often led millennials to justify excessive spending on travel and experiences, sometimes at the cost of financial stability. Gen Z could benefit from finding a balance, appreciating experiences but also recognizing the importance of long-term financial planning and investment.”
Relying on Side Hustles
“Millennials were pioneers in the gig economy,” explained Rafalovsky, “embracing side hustles and freelance work. This flexibility is appealing, but it often comes without the financial securities of traditional employment, such as retirement plans or health insurance. Gen Z should be mindful of these pitfalls. Embracing gig work or entrepreneurial ventures is innovative, but it’s vital to plan for long-term financial security and stability.”
Too Much Online Shopping
Carter Seuthe, CEO of Credit Summit, noted, “Millennials are online shoppers — they are the largest Amazon-ordering demographic, they are most likely to order groceries online and they simply opt for online purchases over in-store shopping. The convenience of shopping online can quickly lead to overspending. Unfortunately, we are already seeing Gen Zers start to follow in this path, especially older Gen Zers who are in their early to mid-20s now.”
Not Saving for Retirement
“Something that I’ve noticed with millennials is that many of them are not saving for retirement or investing like they should be,” said David Kemmerer, CEO, CoinLedger. He continued, “While some of this can be attributed to the high cost of living and the burden of student loan debt, I think that many millennials also have the misconception that those things (saving for retirement and investing) are ones that don’t need to be started until your late 30s or so.
“This really isn’t the case — people should start as soon as they can. Ideally, people should be starting in their early to mid-20s if possible. So, Gen Zers should not be following in their predecessors’ footsteps in this area of money management.”
Not Taking Financial Risks
“Millennials can be cautious about financial risks,” Stern said. “Gen Z might benefit from being more open to diversified and potentially higher-return investments while being mindful of the risks.”
According to Charles Schwab’s 2023 Modern Wealth Survey, 50% of Gen Zers make financial and investment decisions based on what they see on social media from their friends and influencers. When influencers bring attention to things like Roth IRAs and other smart investment tools, it can serve the generation well. It can also be a catalyst for poor financial decision-making; so Gen Z should be cautious with which advice they choose to follow, while still taking advantage of their young age and high risk tolerance.
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This article originally appeared on GOBankingRates.com: 6 Millennial Money Skills Gen Z Shouldn’t Follow
