Despite being one of the most financially overwhelmed generations yet, Gen Z is obsessed with being rich, and an expert told Newsweek why that may be.
That's the latest from a new Intuit Credit Karma study, which discovered both Gen Z—born between 1996 and 2012—and millennials—born 1981 to 1996—noted an overall obsession with becoming rich. The study's Gen Z respondents reported an obsession with being rich at 44 percent, while millennials were just a tad more likely to be obsessed at 46 percent.
This is compared to just 27 percent of the larger American population obsessed with being rich.
One thing that might be contributing to the problem is both generations' reported "money dysmorphia." Money dysmorphia is described as feeling insecure about your financial standing, no matter the reality of your situation, and it ran rampant in Gen Z and millennial respondents, with 43 and 41 percent of each generation respectively reporting it.
Across the board, only 29 percent of the 1,000 surveyed Americans reported feeling money dysmorphia, and there did not appear to be any correlation between the experience and your actual financial situation.
Around 37 percent of those with money dysmorphia had more than $10,000 in savings, and 23 percent of those had more than $30,000. The median amount of savings in America is just $5,300.
"Money dysmorphia is kind of like today's version of keeping up with the Joneses," said Courtney Alev, consumer financial advocate at Credit Karma. "A lot of people are examining their finances and comparing themselves to their peers, people on social media, and even celebrities, which is bringing up feelings of inadequacy. This distortion between perception and reality can prevent people from taking steps towards achieving their financial goals."
A big part of the obsession with being rich also lies in the fact that Gen Z and millennials face economic challenges their parents might not have.
From the housing market's affordability crisis to record-breaking student debt, Gen Z and millennials have not been given an easy foray into adult financial life, and dreaming about being rich may arise based on that, according to Lindsay Bryan-Podvin, a financial therapist and the founder of Mind Money Balance.
"The intrigue of being rich for Gen Z and millennials may be because even a middle-class lifestyle feels out of reach," Bryan-Podvin told Newsweek. "Decreased housing affordability, crushing student loan debt, and the exorbitant cost of childcare may rightfully lend themselves to daydreaming about having financial security, and 'richness' may be a part of that daydream."
Many Gen Z and millennials grew up watching their parents lose large parts of their net worth to stock market crashes and home equities drying up, Bryan-Podvin said, and this increases the fear of financial instability.
They also are digital natives in a culture ripe with social media comparison and constant awareness that those who are richer and seemingly "happier" exist.
"Social media amplifies people's feelings of money dysmorphia, but it's not like these feelings weren't prevalent in the earlier generations," certified financial planner JP Geisbauer told Newsweek. "Having a vibrating, chiming device in your pocket notifying you whenever someone richer than you posts pictures of their PJ, watch or handbag will only exaggerate those feelings."
Of the entire group experiencing money dysmorphia, 82 percent said they felt behind on their finances, and 40 percent said the issue held them back from building savings and 38 percent said it caused them to overspend.
There's also a looming concern that Gen Z and millennials will not be able to have a comfortable retirement, especially as Social Security is predicted to dry up by the early 2030s.
"When the millennials were born, age 65 was considered old age. Today, age 65 is considered middle age," financial planner and The Strategic Wealth advisor founder Nancy Hite told Newsweek. "Although many have saved money through their IRAs, 401Ks, and 403b accounts, retiring at age 62 or 65, the millennial now realizes that the savings will not last for 30 years. As a result, maintaining their desired financial independence is unlikely."
Still, for those struggling with money dysmorphia, there are steps you can take. And first is to take an honest look at your finances, Alev said.
"Set clear goals, make a plan, and, most importantly, keep your eyes on your own paper," Alev said. "If your goal is to build up your savings, start by doing an audit of your finances to see where in your budget you can make room for savings."
Scheduling automatic payments from each paycheck will also help hold you accountable and increase savings in the long term, Alev said.
Feelings about one's own financial status and wealth could be bound to change for millennials and Gen Z within the next few years, too.
While Gen Z and millennials might not be in the best financial spot currently, the groups are in store for a massive wealth reshuffle.
Baby Boomers have been the wealthiest generation in history, amassing more than half of U.S. household wealth. But when they pass, their children, mainly millennials and some Gen Z, will be holding an extra $84 trillion in riches.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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