Are You Fluent in Finance?
How much does our youth really know about finance?
You’re all reading this on Read.Cash, that being said I’m going to make a couple of broad assumptions before proceeding. Please keep in mind that these are purely assumptions and are not meant to patronize anyone that may be reading this.
Assumptions:
1. You are financially literate already, you understand the concepts of fiat, savings, investment, recession, inflation, stagnation, defi, crypto and compound interest.
2. You likely fall between the ages of 19-44.
I work in retail sales here in the states and over the last 10 years I’ve noticed a bit of a pattern and it’s quite concerning to say the least. As with any pattern there are outliers and individuals that don’t fit a particular scope however, for the sake of simplicity let’s exclude the outliers and note the patterns I’ve observed.
On average, the older generations being 50+ or “Boomers” have a pretty firm grip on financial literacy, generally speaking they typically have the most but spend the least. What they do spend they prefer cash prices, no payments, no financing. These individuals usually have retirement accounts, saving accounts, investment accounts and are smart enough to keep all these finances separate as they serve a different purpose. This generation has the most faith in the US dollar and have little to no understanding of cryptocurrency or other forms of digital payments systems.
Then we have the "middle-agers" these individuals are best classified as the Millennials; this is my age bracket of roughly 25-40 years old. These individuals typically don’t have a lot of cash on hand, prefer to use plastic where they can or contactless payments where supported. They are much less concerned with cash price and while trying to minimize interest rates as much as possible are much more open to financing and payments than the boomers. They have a little more than paycheck to paycheck funds but are aware of that fact and tend not to spend too much they don’t actually have. They generally have a good idea what fiat is and what it means but tend to shy away from trusting it completely. When asked about cryptocurrencies they usually have either dabbled themselves, know someone that does or have at least heard or read about it in one form or another.
Then we have “Gen Z” this generation includes my children and actually worries me. Typically including the range of 4-24 year olds. We’re going to focus exclusively on the range of 17-25ish, these individuals typically have no cash on hand, use “virtual” banks that don’t operate brick and mortar locations, prefer contactless payments or virtual payment networks such as Venmo, cash app, Apple Pay, google pay and so on. From afar this doesn’t seem to be such a bad thing until you realize they want to spend money they don’t have and have no way of supporting the payments they create. They have no concept of credit or credit scores, a vague idea of what cash actually is and no systems of savings or investment. They will finance any and everything completely disregarding interest rates and how to minimize unnecessary expense.
So what gives? Did my generation fail? Are we raising children to be financially ignorant? Do you learn systems of finance after a lifetime of trial and error? Why exactly is it that Boomers are in such better financial shape than the current generations?
I have my own opinions and speculations that I’d love to discuss but I want to hear what everyone reading this article has to say. Have you observed the same or different? What do you think the contributing factors are? Would you consider this to be progress or regress? What should we do about it?
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All images are either my own original works or sourced from Pexels unless otherwise noted
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