Generation Z, those born between 1997 and 2004, are glorifying irresponsible financial behavior on social media platforms like TikTok. A trend known as “Girl Math” encourages young women to embrace debt and consumer credit. The popularity of “Buy Now, Pay Later” services, such as the Swedish financial service Klarna, is also being celebrated, with the hashtag #Klarnaschulden, used predominantly by young people to compete over their debt levels, being viewed over 70 million times on TikTok. This behavior is causing concern among experts.
According to Stefan Zeisberger, a professor of behavioral finance theory at the University of Zurich, these behaviors are well-known in behavioral economics. When people value present consumption more than future payment obligations, it’s called “hyperbolic discounting”. When people spend gifted money more carelessly than earned money, it’s called “mental accounting”. Zeisberger notes that financially irresponsible behavior is not limited to the younger generation, but the way information is gathered is different. Generation Z and Millennials (born 1981 to 1996) largely get their financial information from social media, making it a significant source of investment decision information after discussions with parents and friends.
Millennials are generally more skeptical of financial markets than Generation Z. The latter, having not consciously experienced the global financial crisis of 2007 and 2008, have a higher investment rate. They have even surpassed Millennials in this regard. This high investor rate could be due to Generation Z growing up during a time of significant stock market increases. They also witnessed the rise of cryptocurrencies and were exposed to digital investment solutions early on. However, their financial knowledge, or “financial literacy”, is lacking. Three-quarters of Generation Z admit to knowing too little about finances, compared to about half of other generations. Across all age groups, there is a significant gender gap in financial knowledge and interest, with fewer women investing or showing interest in finance than men. This gap is largest in Generation X (born 1965 to 1980).
Despite their risk-taking and consumerist tendencies, younger generations also have fears about financial security. Many no longer believe in the promise that each new generation will have better living conditions. For Millennials and Generation Z, this is the first time they are experiencing inflation on this scale. Many have abandoned the idea that they will have sufficient retirement provision. The majority expect to rely on savings or investments to maintain their standard of living.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇠|
| Sentiment | negative |
| Relevance Score | 1 |
| People | Malin Hunziker, Andreas Dietrich, Stefan Zeisberger |
| Companies | NZZ, Berner Generationenhaus, Hochschule Luzern |
| Currencies | None |
| Securities | None |
