5 Reasons Gen Z Adults Are Richer Than You Were at Their Age

Gen Z, generally defined as those born between 1997 and 2012, accounts for nearly 25% of the population. Their spending power and wealth are undeniable, as indicated in a report on Gen Z spending. The study, a collaborative effort between NielsenIQ, GfK and World Data Lab, found that Gen Z’s spending power will grow to $12 trillion by 2030 and that they are projected to be the wealthiest generation ever.

The report indicated that the average 25-year-old Gen Zer in America has an annual household income of over $40,000. This makes them better off than previous generations were at the same age after taking into account taxes, government transfers and inflation .

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Here are five reasons Gen Z adults are richer than you were at their age.

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Gig Economy Workers

Part of the reason Gen Z is seeing unprecedented wealth from early adulthood is their entry into the workforce. According to the report, “Gen Z is the first generation to have grown up in the ‘gig economy.’ As they enter the workforce, they are more likely than average to be employed in the informal economy (not taxed or monitored by the government) or to work freelance.”

The gig economy is more flexible than the traditional 9-to-5 jobs favored by previous generations. It allows employees to work multiple jobs and seek out high-paying opportunities. According to a 2023 Deloitte report , 46% of Gen Zers participate in the gig economy, and these aren’t mere side hustles. Gen Z uses these gigs to diversify income streams, enhance their skills and negotiate higher rates for their work.

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Different Values

Gen Z has different values compared with older generations. “In the U.S., members of Gen Z are much less concerned with buying a home and having children,” according to the report. “Their top aspirations in life include earning substantial sums of money, having a fulfilling career, and global and domestic travel.”

These differing values may help the newest generation entering adulthood gain substantial amounts of wealth from an early age.

According to a 2023 LendingTree study , it costs nearly $240,000 to raise a child to the age of 18. By waiting to have children, Gen Z has more time to save and invest extra income. They are often further along in their careers, meaning they may be making more money and in a stronger financial position than their predecessors, who tended to have children at a younger age.

Economic Growth

Gen Z’s wealth may also be attributed the unique time in history in which they’re living. For older members of the generation, they became adults during a time of substantial growth. Certain sectors, including those tailored to digital natives, boomed as Gen Zers began working.

“Gen Z’s financial advantage over previous generations could be down to a few elements. Firstly, many Gen Z individuals have entered the workforce during a period of economic growth and technological advancement, especially with regards to IT, tech and software development sectors,” said Erika Kullberg, a personal finance expert and founder of Erika.com .

This growth has afforded many job opportunities for Gen Zers entering the workforce. “These are higher-paying job opportunities that provide great financial stability. This generation is also more tech-savvy, and more capable of leveraging digital tools and platforms to develop their personal branding, which in turn can increase earning potential,” Kullberg said.

Education

Members of Gen Z are also highly educated and aren’t afraid to ensure they get paid for their knowledge and skills.

“Education is a big factor here, too. Gen Zers have grown up at a time where there is a strong emphasis on high-demand careers in technology and digital media, which tend to offer higher salaries,” Kullberg said.

With pushes to make higher education more accessible and affordable, Gen Z may also be better off compared with other generations when it comes to student loans. As reported by CNBC , when surveyed, 70% of Gen Z respondents said the issue of canceling student loan debt was “very” or “somewhat” important in the upcoming election, meaning change could be on the horizon.

Financial Literacy

Finally, Gen Zers are more financially literate than their older counterparts. They have more access to information and are more comfortable discussing finances at the dinner table.

“Gen Z has also benefited from coming of age in a time of greater financial awareness and access to resources, allowing them to make more informed decisions about saving, investing and career planning from a younger age,” Kullberg said.

This article originally appeared on GOBankingRates.com : 5 Reasons Gen Z Adults Are Richer Than You Were at Their Age