Financial Perspectives of Gen Z
“Become a CEO. Money is your best employee,” reads the TikTok bio of Taylor Price, a 25-year-old personal finance influencer. Price has a straightforward philosophy: achieving financial freedom for her generation doesn’t solely rely on high salaries. It’s about making that income work through investments as quickly as possible.
Consider Janelle, a 21-year-old barista who secured an investment of $41,000 from a modest $350 monthly contribution. If she keeps this up, she could accumulate over $2 million by the age of 65. In contrast, Ethan, an engineer with a $140,000 yearly salary, started investing $1,000 monthly at 40 and would only amass just over $1 million by 65. Clearly, in terms of final balance, Janelle’s approach seems more favorable.
However, Price’s argument overlooks some critical nuances. It assumes no significant differences exist between Janelle and Ethan. If we consider that Janelle’s only wealth source is her investment while Ethan comes from a more privileged background—having his university tuition covered by a wealthy corporate lawyer parent and owning multiple properties—the picture shifts. Ethan might retire much more comfortably, having leveraged his resources differently and made lifestyle choices that would benefit his financial future.
Yet, Price’s viewpoint resonates with many in Gen Z, born between 1996 and 2010. It appears to influence their investment behaviors. A report from the World Economic Forum (WEF) in March highlighted that about 30% of Gen Z began investing in early adulthood. A separate survey conducted by Digital Wealth Platform Arta Finance revealed that 54% of Gen Z respondents started investing by age 21, compared to just 27% of Gen Xers.
There’s little doubt that tech-savvy young people invest faster than their predecessors. The rise of fintech tools like Robinhood and Coinbase, as well as the popularity of fractional shares, has made retail investing far more accessible over the last decade or so. Plus, many in this cohort are used to financial content popping up on social media, which influences their knowledge and habits—86% of Gen Z reportedly learned about personal investment this way, marking a generational shift in financial understanding.
However, the realities of the job market also impact their ability to engage in investing. Many, like Janelle, can’t rely solely on their incomes, especially given that about 80% of the U.S. workforce is in non-traditional employment. Despite consistent productivity growth since the 1950s, wages haven’t risen accordingly. According to the Economic Policy Institute (EPI), since 1979, there’s been a stark disconnect between economic growth and workers’ salaries, with productivity climbing 86% while hourly wages only increased by 32%.
The EPI highlights that the gains from increased productivity are absorbed mainly by high-value companies and professionals, leading to worsening income inequality. Essentially, wage disparities have grown, and workers have seen a diminished share of income attributable to capital.
In such conditions, baristas like Janelle face significant barriers. She might rightly invest, but this individual-focused financial logic often neglects systemic issues at play. The reality is that wealth is increasingly concentrated, and those with access to more resources—whether through higher salaries or inheritance—tend to reap greater benefits from market participation.
A study from 2023 by economists Jonathan Berman and Branco Milanovic supports this perspective, indicating a rise of what they call the “homoplastic elite.” Using various datasets, they noted that the wealthiest fraction has seen their share of both labor and capital increase significantly since the 1980s, contributing to around 20% of income inequality since 1986.
While it’s true that more people are likely to own some capital now than ever before, this doesn’t necessarily mean Gen Z will achieve financial independence by starting to invest early, especially if the majority of capital remains in the hands of the highest earners. A $41,000 investing barista may indeed outpace her later-investing self, but in the grand scheme, she still faces a daunting challenge in comparison to those who are genuinely wealthy.
