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How Gen Z is redefining the personal finance space

10 min read
Marcus Cook

Born after 1996, Generation Z is vastly different from its predecessors in many ways. This generation is already more racially and ethnically diverse than any previous generation. It is on track to be the most educated generation. Gen Z has little or no memory of a world that existed before smartphones and social media. With these stark differences from prior generations, it's no surprise that Gen Z has redefined many aspects of life — in particular, the way they look at personal finance.

No longer are kids stashing away their savings in a piggy bank. Gen Z doesn't think about maxing out their company's 401(k). Instead, they choose to use that money to invest in meme stocks and nonfungible tokens (NFTs).

Gen Z is full of teenagers looking to make money by manipulating Instagram algorithms to go viral or investing in the next cryptocurrency that will jump 100x.

While previous generations relied on family friends or financial advisers to give them money advice, Gen Z prefers to get their information from sources that didn't exist 20 years ago.

Platforms like Instagram, TikTok and YouTube are all valuable sources of information for Gen Z as they try to navigate the world of wealth building.

This article will cover all the different ways Gen Z is redefining the personal finance space and give some examples of current Gen Z entrepreneurs leading the way.

Gen Z is rewriting their financial handbooks

It makes sense that the generation that watched their parents go through two recessions is skeptical of corporate life. They saw some of the most established companies in the world become financially bankrupt, and con men like Bernie Madoff steal money from honest, hard-working individuals.

After surviving the economic downturn caused by the COVID-19 pandemic, many people within Gen Z want to rewrite their financial handbooks.

Gen Z doesn't care about the big paychecks that come out of Wall Street. Instead, this generation would rather work for companies with a robust ethical code.

Companies that care about inclusivity, the environment and work-life balance appeal to this value-driven generation.

A lot of this has to do with the proliferation of social media. It is now easier than ever for marginalized voices to be heard and shared. Before the internet and social media, it was much easier for businesses to keep their malpractice under wraps. However, with the inability to hide things like working conditions and salary, the younger generation has become increasingly aware of corporate shortcomings.

This new awareness has inspired many in Gen Z to become their own bosses. With so many new technologies, we have entered a world where anyone with internet access can start a company.

On top of this, every major publication from Forbes to Business Insider shares stories of successful Gen Z entrepreneurs on their platform. This proliferation of Gen Z entrepreneurs has made a lot of individuals within Gen Z think to themselves that if one of us can achieve business success, so can all of us.

Photo by Executium on Unsplash

Gen Z would rather trade than invest

Gen Z grew up with constant access to instant gratification. If you wanted a dopamine hit in prior years, you would have to talk to friends, work out, or eat a nice meal.

Today, all we need to do is go on Instagram, upload a post of ourselves, and immediately feel the dopamine release in our brain from likes and comments. It's no surprise then that Gen Z spends the most time on social media platforms compared to their older counterparts.

While many parents wish their kids would spend more time being social and less time on their phones, mobile use has some benefits. 

Connor Bruggemann, for example, taught himself how to trade penny stocks while still in high school. Starting with an initial investment of just $10,000, he was able to turn that into $400,000.

With his success in trading, he started a business his senior year of high school called Investors Corner, an online education platform for beginning traders. He grew that business to the point where it made $20,000 a month and eventually got acquired.

Although there are serious risks involved in any form of trading, more and more Gen Z individuals choose to take riskier investments than older generations.

A Barclay's survey found that over the past year, "30% of 18-24-year-olds admitted to upping their risk appetite, compared to only 18% of 35-44-year-olds.

As investing apps like Robinhood and Webull keep entering the market, Gen Z will continue to trade stocks and cryptocurrencies through their smartphones in the hopes of catching the next Gamestop or Etherum trend.

Gen Z builds brands that leverage social media

It's no surprise that Gen Z leverages social media when building their brands.

With Gen Z being the most significant social media users, they feel comfortable navigating the various social media platforms.

Although many within Gen Z use social media platforms to entertain themselves, others use them to build successful businesses.

Biaheza, for example, was unlike other kids his age. At 14, instead of playing video games with friends, he started working on side hustles. He decided to grow an Instagram theme page where he would sell shoutouts to other companies. As he developed the Instagram page, more and more companies started to reach out asking for advertisements. Eventually, he noticed that most of the people who were asking for shoutouts were dropshippers.

When he was 17, he decided to try out dropshipping himself. However, he found it was too expensive to go to other Instagram theme pages for advertising. Therefore, he went back to growing his own theme pages to advertise his dropshipping products.

He worked nonstop for four months to grow his Instagram theme page and dropshipping business. Once his company was making around $1,000 a month, he started his second dropshipping store. His growth took off. In its first month, he made over $30,000 in sales. From there, he would master other forms of digital marketing like Facebook ads and content creation.

In the last month of his freshman year of college, he made over 0,000 in profit.

After this, he took a break from college and now shares his Instagram and social media marketing knowledge through his YouTube channel.

Luckily, there are many stories like Biaheza's where young adults in Gen Z leverage social media marketing to build profitable businesses.

In fact, dropshipping is a very popular business model with Gen Z, as most of the advertising comes from social media. So, while most of Gen Z looks at social media as a way to waste time and entertain themselves, others have successfully used their knowledge of the platform to build great businesses.

Gen Z produces mission-driven entrepreneurs

A Pew Research Center survey of Americans ages 13 and older found that Gen Z is progressive and pro-government. Many members of Gen Z see the country's growing racial and ethnic diversity as a good thing and are less likely than prior generations to see the United States as superior to other countries.

Therefore, it is no surprise that many people in Gen Z are building companies around social justice and equity.

For example, Quinn King and Alec Gillinder are two small-town boys who studied industrial design at Syracuse University. They met while taking classes together junior year and quickly realized that they had a passion for entrepreneurship. While commuting to class, they would often see advertisements for Invent@SU, a six-week summer program where students could learn about design, product development and pitching ideas to investors.

They were both interested in spending a summer together innovating and designing a product. They ended up signing up for the program, and during the first week, they ran into a question that many young entrepreneurs face: what should they build?

They started writing down all the ideas that came to their head. The duo came up with many ideas, but they didn't know which one they should pursue. They eventually came up with the brilliant idea to look up all the previous products that won first place at Invent@SU.

What they found is that all the previous winners had been in the medical device space. This information allowed them to disregard all the ideas that weren't within this industry.

With their narrower focus, they decided to create the Liberating Intravenous (L-IV), a portable alternative to the standard IV treatment. Quinn formed this idea from his personal experience of seeing his mother go through IV treatment for cancer.

He recalled not liking his mother's IV pole as it didn't allow her to move as freely as she would have liked. Quinn and Alec would spend the summer creating a prototype of the L-IV and eventually place first in their six-week accelerator program, granting them a $1,500 stipend.

They started their company MedUX, which has received over $100,000 in funding and has a board of well-known figures in the medical devices space. Although Quinn and Alec have had their fair share of success, they also have had setbacks.

Due to being part of Gen Z, they constantly have to deal with criticism that they are either too young or too inexperienced to create a commercially viable product in an industry as intricate as the medical device space.

They said that one of the big reasons why they stuck with their idea was due to positive feedback from potential customers.

For example, during the first week of Invent@SU, Alec and Quinn had begun to reach out to nurses in the area to get customer feedback regarding their initial design of L-IV.

Although they expected to get some helpful information, they never could have foreseen the response. Quinn remembers one of the nurses saying to him, "Listen, you have something here. Don't think of this as a side project. This is something that could really help people."

Although Quinn and Alec already believed that their product could change people's lives for the better, hearing it firsthand from potential customers reassured them to keep pursuing their idea in the face of setbacks.

Another thing that motivated Quinn and Alec to keep pursuing their business was that the business's mission was near to their heart. The idea was sparked from Quinn's own experience and pain point, seeing his mother having to go through IV treatment from cancer and wanting to make that process better for her.

Finally, Quinn and Alec are aware that their age can get in the way of investors believing in them. When Quinn and Alec first started talking to investors, many doubted Quinn and Alec solely because of their age.

Now, Alec and Quinn have a board of highly established figures in the medical devices space.

Their board helps them with everything from product advancements to assisting them with financing. They said that they would not be here today if it weren't for their group of board members who believed in both them and the product.

Quinn had some financial advice for Gen Z: "As a young entrepreneur, there will always be people who have their discrepancies about your age and background. The best way to get through it is just to keep meeting new people, and eventually, you will find someone who sees the mission and not the person."

Related: 5 business ideas for post-pandemic needs