Two-thirds of millennials & Gen Z feel anxious about money

Younger people report experiencing financial anxiety at higher rates, a consequence of how much economic volatility they’ve experienced.

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a certified personal finance counselor and former senior reporter at Policygenius, where he covered insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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The majority of Americans are anxious about their finances, but younger people, and people who don’t work with a financial advisor, are especially anxious, according to a study from Northwestern Mutual. They found that 66% of the Gen Z and millennial generations feel at least somewhat anxious about their finances, compared to 54% of all U.S. adults. 

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Why are young people anxious about their finances?

Millennials and Gen Z, the two generations representing Americans born after 1981, have experienced multiple rounds of economic volatility, including recessions after the burst of the dot-com bubble and terrorist attacks of 2001, the mortgage crisis of 2008, and most recently the COVID-19 pandemic. Now, they’re living through a historic bout of inflation.

“In a relatively short period of time, they’ve seen a lot of volatility,” says Christian Mitchell, executive vice president and chief customer officer for Northwestern Mutual.

On the other hand, older people have more established finances and more experience dealing with volatility. They tend to feel more confident about the future. 

But given the troubling news about the economy, are younger people right to feel anxious about their finances? There’s a difference between feeling anxious about your finances, which is often coupled with doubt and can spill over into your general emotional state, and taking an interest in your finances, Mitchell says. 

“That doesn’t mean you’re completely worry-free, but you’re taking tangible steps,” he says. “You’re upskilling. You’re taking action. You’re relying on people to help you get better.”

What difference does a cup of coffee make?

Anxiety may be leading younger people to sweat the small stuff. 53% of Gen Z and 52% of millennials believe small purchases like a daily cup of coffee will impact their long-term financial security, well above their older counterparts. This may come from a reliance on social media to learn about personal finance, Mitchell says. 

“Social media has all kinds of positives, but I think social media often offers very reductive solutions,” he says. 

The idea that you can save millions by cutting coffee out of your life (or that you can use life insurance to get rich) trends often on social media, but mastering money isn’t so simple. You need to be able to balance short- and long-term priorities, understand what benefits your employer grants, and predict far-off expenses. 

“That, by nature, is a more complex problem that isn’t easily solved by some clickbait list that you find on social media,” Mitchell says. 

How to alleviate financial anxiety

Mitchell says the most effective strategy is to work with an accredited financial professional, especially because of how complex personal finances have become — today you can invest in fractional shares in classic cars, non-fungible tokens, and a host of cryptocurrencies

“The best way to sort through that is working with another human who understands your background, what you care about, what you want to achieve, how you make decisions,” Mitchell says. The survey data confirm this: only 46% of people who work with a financial advisor felt anxious about their finances, compared to 58% among people who don’t.

You can also learn more about finances on your own. Rather than turning to social media, check out unbiased sources, like financial education programs from your local college or library. Many people took the time to organize their “financial garage” in the wake of the pandemic, Mitchell says, which made them feel more confident about their finances.

“Spending time to understand the facts can help alleviate people’s financial insecurity to a certain extent,” he says.

The results of the survey underscore that finances are an important part of your overall health. People who identified themselves as “disciplined” financial planners tended to sleep better than those who didn’t. 

“These are just different dimensions of the same underlying wellness,” Mitchell says. “All of these dimensions have such a heavy influence on each other.”

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