Gen Z is now the darling demographic for businesses, and these younger consumers have shown they are not afraid to haggle for a car, and they prefer luxury automobiles. They also haven’t known a day in their life without the internet or social media.

Gen Z is a mobile generation. They’re tech savvy, socially conscious, and the youngest members are entering high school. They also have high expectations about their future earnings; a recent story explained that Gen Z expected to be promoted within the first year on the job. They’re motivated and have high expectations, but where is Gen Z learning about finances? According to a report from Credit Karma, Gen Z is receiving most of their advice and financial education from social media influencers.

TikTok for Financial Advice?

Gen Z feels left behind in the realm of financial education. The report from Credit Karma revealed that many Americans (Gen Z included) felt ill-prepared to make financial decisions; school didn’t prepare them for this and perhaps their parents never taught them about financial literacy.

In fact, Credit Karma noted that “….only 36% of respondents say they feel confident managing their daily finances.” However, a majority of respondents felt that they were financially literate.

For Gen Z, the financial questions that they have are being answered. However, Gen Z isn’t looking up those answers in any books written by financial advisors and they’re also not asking their parents. So, where are they finding their financial advice?

Gen Z is turning to social media influencers to give them the answers about their financial questions. More specifically, Gen Z is focusing on Tik Tok influencers; nearly half of Gen Z  respondents (45%) noted that they used TikTok for financial information/advice. In addition, blogs (from financial institutions), YouTube and Facebook also were noted as popular resources.

What Is Financial Literacy?

Some consumers might not know what it means to be financially literate. The term financial literacy refers to an understanding about money management and the basics of finance and investment. Financially literate consumers can budget and manage their income and expenses; they know the impact of high-interest debt like credit cards and understand how to plan for buying a home or car.

Financial literacy doesn’t mean that an individual won’t make a mistake with money; mistakes can happen to anyone. However, an individual who is financially literate understands the ins and outs of budgeting, income, expenses, the loan process and interest rates, etc. 

Anyone can work on becoming more financially literate. The reality is that not everyone is raised in a home where money or finances were comfortably discussed. Children see the habits of their parents and they might model these habits–good or bad–later on in life.

The Path to Financial Literacy

The Path to Financial Literacy

TikTok might not be the ideal resource for every individual to learn how to become financially literate. Consumers should research influencers to better understand their background and discern if the individual’s advice is reputable. 

Individuals who want to become better at money management also could use other online sites as resources. For example, the site Investopedia can help consumers understand financial terms, as the site explains these terms in language that most people can understand.

Many sites also provide details and insight related to loans and how interest rates impact not only the monthly cost of a loan but the long-term cost as well. Some sites like Nerdwallet include calculator tools that help consumers find monthly payment amounts or convert a monthly payment amount into a purchase price when shopping for a car.

Each individual also might have specific financial questions or concerns. Some might want to learn how to budget their income, others might want to learn about how to invest in the stock market. Consumers can research experts who can provide wisdom and insight. 

Financial Literacy Doesn’t Necessarily Equal Wealth

Becoming financially literate doesn’t necessarily mean that the individual is going to become wealthy. However, a financially literate person will know how to make smart decisions with their money and manage their finances appropriately. 

Financial literacy is empowering because knowledge can help remove some of the trepidation related to everyday spending and finances. When an individual knows their budget and their limitations, they can better manage each dollar. A financially literate individual knows how to manage their account to ensure that they don’t overdraft and spend more than they have. 

Those who don’t feel literate with their finances can enroll in a class related to budgeting or personal finances. Some school districts require students to take these classes as part of graduation requirements. Unfortunately, though, many students are not taught about finances and money matters.

Creating a Budget Can Be a Good First Step

Creating a Budget Can Be a Good First Step

Individuals who want to take control of their finances and become financially literate can start with one basic step: create a budget. If overspending is causing stress, creating a budget might help to feel more in control.

To create a budget, individuals will need to gather their bills from the previous month. They also should review their previous month’s bank statement to calculate spending related to necessities like fuel, food, and miscellaneous expenses, too.

Make a list of each expense and its cost. Add up all the expenses. Then total up the monthly income. For individuals who are salaried, this should be fairly simple as the pay periods should remain consistent. 

Are expenses more than income? Is there a surplus? If expenses exceed income, cutting unnecessary spend is a good next step. Decide what expenses can be cut and create a budget that best fits into the financial means of income.

Unfortunately, some families might not be able to cut anything. Some might not make enough money to meet their basic needs. In this case, there could be nonprofit organizations that could provide help or advice. Some families also could qualify for government programs that provide assistance with food. 

Individuals who can feasibly make cuts to their budget might realize that they are overspending on unnecessary items. What are some luxuries that can be cut from the budget? Here are a few easy items to ax when expenses are eating up income:

  • Streaming services
  • Dining out
  • Name brand items
  • Extra beauty treatments (like manicures)
  • Gym memberships

Changing shopping habits could help decrease unnecessary expenses. When grocery shopping, try not to shop hungry. Opt for store brands instead of name brands. Making a list also can help individuals buy only what they need. A grocery list could also ensure that an item isn’t forgotten; missing an item leads to another trip to the store (and impulse purchases).

While some individuals love buying a cup of coffee at a coffee shop, those java jolts add up over time. Instead, brew that coffee at home to save money. 

Use apps to find the best gas prices, too. This can help save money at the pump.

Another helpful tip to save some money? Pay bills on time. Late fees can result in losing more money each month. Set reminders on a phone or device to ensure that a bill due date isn’t missed. If there is extra money during the month, individuals might set aside the excess to start a savings fund. Others might decide to use it to help pay down debt. Some prefer to pay down the lowest debt first, while others want to chip away at a balance that’s subject to higher interest rates. There isn’t just one way to pay down debt.

Looking for More Financial Resources?

Not everyone feels financially literate. The internet offers a variety of resources that help individuals of all ages find information related to financial matters and research on different financial topics.

Before turning to any site or individual for advice or tips, research their background. There are many reputable resources on the internet, including sites like Investopedia, Nerdwallet, Kelley Blue Book (for cars), Credit Karma, etc. Even credit reporting bureaus offer blogs with financial topics. 

In addition, major news media offer financial experts who write columns or provide tips. News outlets also typically include a biography for their experts. 

Financial classes or books also could be beneficial for individuals to increase their financial literacy. CNBC offers a list of free financial courses to help gain a better grasp of personal finances.

Parents who want to help their child become more financially literate could explore the curriculum offered at their local high school. Again, some districts require a personal finance class. However, if this isn’t offered, there are resources for students to gain this knowledge. Next Gen Personal Finance offers games and activities to help students learn more about money and finances. Parents might want to use this resource, too.

While Gen Z might turn to TikTok for help with their finances, there are many resources available to help increase financial literacy. Take a free class or use information offered through a reputable financial news site; however, consumers should research their resources to ensure that the experts are truly experts.