Financial Literacy

Despite Barriers, 80% Of Gen Z Are Taking Positive Steps Toward Achieving Their Financial Goals

Working to understand the unique needs and priorities of diverse communities in order to provide the resources and guidance to empower everyone on their journey to financial wellness

Bank of America Better Money Habits survey explores how ethnicity and gender influence young adults’ access to financial resources and guidance, further underscoring the need to address financial education gaps.

CHARLOTTE, N.C., Oct. 27, 2021 /PRNewswire/ — Gen Z is emerging from the pandemic with a greater focus on saving, financial independence, gathering life experiences, and seeking financial education many were without access to in their schools and communities growing up. This is according to new research published today by Bank of America’s Better Money Habits exploring what this generation (ages 18 to 24) view as their greatest financial barriers, and how they are taking charge of their financial lives.

“As Gen Z gets started financially and professionally, we see a great deal of motivation and positive steps toward building a solid financial foundation,” said Christine Channels, Head of Community Banking and Client Protection at Bank of America. “At the same time, an unmistakable need for more financial education persists among this generation. Through our Better Money Habits platform, we’re committed to connecting these young adults to a wide range of resources and guidance to help them develop financial know-how, and navigate barriers to achieving their goals.”

Key findings from the research include:

  • Over the past year, 80% of Gen Zers have taken one or more positive financial actions. Among which, 70% added to savings, 29% mapped out financial goals, 26% contributed to a retirement account, and 26% invested in the market.
  • Despite financial and other pandemic-related challenges, 68% remain optimistic about their financial future. Nearly 70% also say the pandemic influenced their financial priorities, including a greater focus on saving for future goals (33%) and living a more frugal lifestyle (19%).
  • Half (49%) describe themselves as fully or mostly financially independent. Among the half still fully (14%) or mostly (36%) dependent on their parents financially, 24% are prioritizing becoming financially independent.
  • Today, Gen Z views their greatest barriers to financial success as insufficient income to achieve financial goals (46%), lack of job stability (23%) and being unable to save (21%). When asked about the most stressful financial aspects of their lives, Gen Z cites not being able to afford the life they want (37%), lack of emergency savings (33%), student loan debt (22%), health care costs (17%) and simply making it to their next paycheck (11%).
  • One-third (34%) of Gen Z rate their financial knowledge as low, among whom 40% say they don’t even know where to start learning about finances. A significant portion of Gen Z (40%) also say they were never offered a financial education course in school.
  • Much of Gen Z feels knowledgeable about basic financial concepts – including saving (85%), managing money (82%) and budgeting (77%). However, their knowledge levels decrease significantly when it comes to topics that can be critical to a more secure financial future, including saving for retirement (38%), investing (30%) and buying a home (26%).
  • When asked where they learned about finances, only 33% said in school (K-12 and/or college). Most learned at home or from their family (75%), while 39% were self-taught, 20% learned from friends and peers and 13% from a financial professional.

The research also explored the role of race, ethnicity and gender in access to financial education and opportunities, uncovering:

Black/African American Gen Z More Likely to be Financially Independent, Cite Starting a Business in their Definition of Success

  • 59% of Gen Z in this community identify as mostly or fully financially independent – compared to 47% of non-Black/African American Gen Z. They also cited greater knowledge of several financial topics, including filing taxes (59% vs. 39%), saving for retirement (44% vs. 37%) and purchasing a home (41% vs. 24%).
  • 66% carry debt, and of those that use credit cards, 44% have accrued credit card debt – more than non-Black/African American Gen Z (51% and 21%, respectively) – and are nearly twice as likely to cite debt as a barrier to financial success (30% vs. 17%).
  • Black/African American Gen Z are nearly 6x more likely to include starting a business in their definition of success (17% vs. 3%), and 2x as likely to cite starting or growing a business as top priority for the year ahead (16% vs. 8%).

Hispanic Gen Z Highlight Greater Gaps in Financial Education, see Homeownership as Success

  • Nearly half (48%) of Hispanic Gen Z say they were never offered a financial education class in school – more so than non-Hispanic Gen Z (37%). This community is less likely to feel knowledgeable about building credit (56% vs. 63%), saving for retirement (34% vs. 40%) and filing taxes (28% vs. 45%).
  • They are more likely to cite lower income (52% vs. 44%) and job stability (31% vs. 20%) among their top barriers to financial success.
  • Homeownership is especially important to this community: 39% define financial success as owning a home, compared to 26% of non-Hispanic Gen Z.

Gen Z Women Face Financial Knowledge and Investing Gaps, but are More Likely to be Taking Steps Toward Financial Wellness

  • The gender investing gap persists in younger generations: Gen Z women are less likely to feel knowledgeable about investing (22% compared to 37% of men) and less likely to have invested in the market over the last year (17% vs. 25%). They also feel less knowledgeable about managing debt (56% vs. 66%) and saving for retirement (35% vs. 41%).
  • Gen Z women feel more knowledgeable about building credit (66% vs. 57%), however they are also more likely to cite debt as a barrier to financial success (23% vs. 14%). In fact, 36% have at least $5,000 of debt compared to 28% of men – which may be contributing to the fact that more women are prioritizing paying down debt in the year ahead than men (23% vs. 18%).
  • Gen Z women were, however, more likely than men to have taken positive financial actions over the last year (82% vs. 78%). Positive actions among Gen Z women taking them include contributing to savings (76% vs. 63%), openly discussing money with family, friends or colleagues (63% vs. 48%), sticking to a budget (27% vs. 21%) and seeking guidance on managing finances (25% vs. 16%).

“As a company and as a society, it is critical that we address the financial education and opportunity gaps that persist across the communities of young adults we serve,” said Alberto Garofalo, Community Banking & Development executive at Bank of America. “This research is another step in our commitment to fully understanding the unique needs and priorities of diverse communities, so we can provide the resources and guidance to empower everyone on their journey to financial wellness.”




Better Money Habits®
As Gen Z prioritizes better money habits, they continue to seek advice and guidance as they look to take control of their finances and plan the future. Bank of America’s Better Money Habits platform offers free financial education content and tools that break down financial topics in ways that are approachable and easy to understand. The platform connects people at all life stages to relevant tools that help build know-how to help them take action toward their financial goals. It also includes specific resources catered to Gen Z and young adults, covering topics including budgeting, building credit, borrowing, investing and more. We continually look for ways to expand the reach of Better Money Habits and also offer Spanish language resources on the site.
The study was conducted August 12 – September 7, 2021, by Ipsos in English and is based on nationally representative probability samples of 1,024 general population adults (age 18 or older), and a partially overlapping sample of 635 Gen Z adults (age 18-24), including 28 Gen Z adults from a non-probability sample. This survey was conducted primarily using the Ipsos KnowledgePanel®, the largest and most well-established online probability-based panel that is representative of the adult US population. Panelists are scientifically recruited into this invitation-only panel via postal mailings to a random selection of residential addresses. To ensure that non-internet households are included, Ipsos provides access to a tablet and internet connection to those who need them. Because of this probability-based sampling approach, KnowledgePanel findings can be reported with a margin of sampling error and projected to the general population. The margin of sampling error for the general population sample is +/- 3.3 percentage points at the 95 percent confidence level.
Bank of America
Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 66 million consumer and small business clients with approximately 4,200 retail financial centers, approximately 17,000 ATMs, and award-winning digital banking with approximately 41 million active users, including approximately 32 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.