• Caitlin Keep

3 Financial Literacy Needs Defining Gen Z

Digital native.

This term is used to define individuals “born after the widespread adoption of digital technology.” And nowhere is it more apparent than with Gen Z.

Gen Z has grown up on technology. It has mentored them. Educated them. Provided access to a limitless stream of information. At the touch of a fingertip, they can find the answer to any question.

As a result, they are savvy. They know what they want and they know how to get it.

Except when it comes to money.

While Gen Zers show an active interest in managing money, saving more at an earlier age than previous generations, they may not have the tools to manage it properly.

And the most important tool they lack is financial literacy.

Consider the 2021 P-Fin Index survey, known as the “barometer of financial literacy” for the American adult population. If you zoom in on financial literacy data for Gen Z, you’ll find that two-thirds of the generation scored below 50%.

With members of Gen Z entering adulthood, the stakes are rising. In the coming years, Gen Zers will be making critical financial decisions like whether to attend college, buy a house, and save for retirement. These decisions could impact the rest of their lives.

Are they ready?

The reality is that Gen Z needs a boost of financial literacy. And they need it in three key areas: role models, education, and tools.

For the rest of this article, we’re going to talk about the importance of financial literacy and how to improve it for the upcoming generation. We’re also going to talk about ways Fiat Ventures is powering critical resources for Gen Z.

Let’s get started.

Gen Z Needs Role Models

Who was the first person that taught you about money?

For many Gen Zers, it was a stranger on the internet.

Where prior generations relied on financial knowledge passed down from parents or teachers, Gen Z has more options. If they don’t see savvy money handlers around them, they can head to social media.

There, they find thousands of strangers sharing stories. Pulling back the curtain on financial decisions to discuss the why and how. Empowering young people to learn about everything from stock market investing to crypto to daily money management.

All at the scroll of a thumb.

Financial advice has been around for ages. And it’s widely available all across the Internet. But many of the role models that find success with Gen Z connect on a deeper level. Many of them are members of Gen Z or highly skilled at speaking their language.

It’s no wonder social media influencers have significant sway over Gen Z.

Why are financial literacy rates low, then?

The short answer: awareness. Not enough members of Gen Z have found their online role models. There’s more work that needs to be done to position role models and put them in front of the Gen Zers who need them most.

And FinTech companies can help.

FinTech companies serving the Gen Z population have a unique ability to position role models. By spotlighting and promoting online influencers, FinTech companies can introduce members of Gen Z to powerful role models.

They can give them someone to look up to.

Gen Z Needs Education (On Their Terms)

Google “financial education” and you’ll be met with 2.7 billion search results.

The educational resources are available and most of them are free. Popular sites like Investopedia break down financial terms. Khan Academy and Bank of America have a Better Money Habits series of videos (as do other large financial institutions). And there’s an army of blogs, newsletters, and nonprofits serving up education.

Despite all of this, there’s clearly something missing.

The Gen Z element.

Let’s look at the example of freelance work.

Statistics show that Gen Z, despite their age, is the most freelance-focused generation. Half of all Gen Zers surveyed are freelancing. And the data suggests this figure will only increase over the next few years.

However, much of the financial education material out there is still focused on traditional, W-2 employment. Talking about how to budget with a fixed income and a 401(k), not how to manage ebbing work and source healthcare.

The education doesn’t match the learner.

Here, again, FinTech companies can step in. They can support financial literacy by, first, understanding the needs of the Gen Z generation. And then by providing educational resources that meet the generation where they’re at.

Money is personal. Education should be too.

Gen Z Needs Digital Tools

Knowledge is critical.

But without the tools to manage their personal finances, Gen Z will struggle. Especially as their financial lives increase in complexity.

And it’s not just their financial picture that’s increasing in complexity. So too is the market. With the emergence of an expanded set of investment options–like crypto, private equity and private lending, venture capital, and more–Gen Zers face more choice than ever before.

It’s enough to overwhelm anyone.

That’s where FinTech companies emerge. They provide dashboards that highlight savings and investment trends. They provide simple automation for everyday tasks. They provide easy-to-use, mobile-first tools for managing money.

Online banking and mobile investment changed the game for millions of Millennials. It’s time these tools fit the new needs of Gen Z.

Fiat Ventures’ Portfolio Companies are Stepping Up

At Fiat Ventures, one of our core values is investing in purpose-driven businesses.

And in this space, we’re proud to partner with some truly great companies. Companies that are reshaping the financial landscape for Gen Z and working hard to close the literacy gap for the up-and-coming generation.

First, Copper: Fiat recently led the series A funding round for Copper, having worked with them through our Fiat Growth consulting arm for over a year, prior to making the investment. We’ve backed Copper because the team at Copper identified the gap in the market and stepped in with a solution. Creating a safe space for teens, ages 13+, to spend, invest, and monitor their money under the supervision of adults. This is a powerful new tool that can help young people learn financial literacy early and often.

Next, Boost: The team at Boost is tackling the freelancer dilemma with a focus on the Gen Z population. They have an impactful solution that helps freelancers of all shapes and sizes track and manage their money, while also planning for tax reporting. The world of freelancers is growing by the day, powered by ambitious and imaginative Gen Zers. And Boost is making it easier than ever for them to take control of their financial lives. Fiat invested in their pre-seed round and is working closely to sculpt the product to slip right in as the go-to solution to the freelance economy.

This is only the beginning.

Gen Z needs access to legitimate role models in the financial literacy space. Access to education that can keep pace with the evolving financial landscape. And the proper tools to set themselves up for financial success.

Fiat Ventures is proud to partner with Fintech companies like Copper and Boost. We’re proud to be on the forefront of creating access to financial literacy for all generations. And we look forward to helping equip Gen Z and beyond with the knowledge and confidence to take control of their financial future.

We can’t wait to see what comes next.

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