Reasons Gen Z Make Poor Financial Decisions

The financial landscape for Generation Z (Gen Z), is marked by a complex interplay of factors influencing their economic decisions.

Despite being digital natives, this generation faces challenges that contribute to what is perceived as poor financial decision-making.

From limited financial education to the impact of social media and the burden of student loan debt, Gen Z grapples with a unique set of circumstances shaping their economic choices.

In this exploration, we dissect various subtopics to shed light on the reasons behind Gen Z’s financial decision challenges and consider potential avenues for improvement.

1. Lack of Financial Education

Limited exposure to financial literacy programs in schools has contributed to the lack of financial education among Gen Z. Many schools do not prioritize teaching students about budgeting, saving, and investing, leaving them ill-equipped to make informed financial decisions. Without proper guidance, Gen Z may struggle to understand the importance of managing their money effectively.

This lack of financial education can have long-term consequences. Gen Z may find themselves making poor financial choices, such as overspending, accumulating debt, or failing to save for the future. Without the necessary knowledge and skills, they may struggle to navigate the complexities of personal finance.

To address this issue, schools must incorporate comprehensive financial literacy programs into their curriculum. By providing students with the tools and knowledge they need to make sound financial decisions, we can empower Gen Z to build a strong foundation for their financial future. With the right education, they can develop healthy financial habits and make informed choices that will benefit them throughout their lives.

2. Influence of Social Media

The influence of social media on Gen Z’s financial decisions cannot be underestimated. One major factor is the pressure to keep up with trends and spend on material possessions. Social media platforms are filled with images of influencers showcasing their luxurious lifestyles, creating a desire for Gen Z to have the same.

This comparison culture often leads to impulsive buying decisions, as young people strive to project a certain image online. The constant exposure to these images and the fear of missing out can push Gen Z to make poor financial choices, prioritizing instant gratification over long-term financial stability.

3. Student Loan Debt

Student loan debt is a significant factor contributing to the poor financial decisions made by Gen Z. The high levels of student loans that many young people carry can have a detrimental impact on their financial stability. The burden of student loan debt can make it challenging for Gen Z to achieve their financial goals and make sound financial decisions.

Struggling with student loan repayment can have a ripple effect on overall financial decisions. The monthly payments and interest rates associated with student loans can eat into a significant portion of Gen Z’s income, leaving them with limited funds for other essential expenses or savings. This financial strain can lead to a cycle of debt and prevent young people from building a solid financial foundation.

The impact of student loan debt on Gen Z’s financial decisions goes beyond just the repayment aspect. It can also affect their ability to pursue higher education or invest in their future. The fear of accumulating more debt may discourage young people from pursuing advanced degrees or taking risks in their careers, limiting their potential for financial growth.

In addition, the stress and anxiety caused by student loan debt can lead to impulsive financial decisions. Gen Z may prioritize short-term relief or instant gratification over long-term financial stability, further exacerbating their financial challenges.

Overall, the burden of student loan debt significantly influences Gen Z’s financial decisions, hindering their ability to make sound choices and achieve financial security. Policymakers and educational institutions must address this issue and provide support and resources to help young people navigate the challenges of student loan debt.

4. Gig Economy Challenges

The gig economy presents significant challenges for Gen Z when it comes to their financial decisions. Job insecurity and irregular income make it difficult for young people to effectively plan their finances. Without a stable and predictable income, it becomes challenging to budget, save, and make long-term financial plans. Additionally, the gig economy often lacks the traditional employee benefits that provide financial security, such as health insurance, retirement plans, and paid time off. This lack of access to these benefits further adds to the financial challenges faced by Gen Z in the gig economy.

5. Rising Cost of Living

The rising cost of living is a significant factor contributing to the poor financial decisions made by Gen Z. With increased living expenses, it becomes challenging for young people to save and manage their finances effectively. Balancing housing costs, utilities, and other necessities can quickly eat into their income, leaving little room for savings or investments. This financial strain can lead to a cycle of paycheck-to-paycheck living, making it difficult to build a stable financial future.

One of the main challenges Gen Z faces is the high cost of housing. Rent prices have been steadily increasing, especially in urban areas, making it harder for young people to find affordable housing options. Coupled with the rising costs of utilities, such as electricity, water, and internet, it becomes even more challenging to allocate funds towards savings or other financial goals.

In addition to housing and utilities, other necessities like groceries, transportation, and healthcare expenses also contribute to the rising cost of living. Gen Z often finds themselves struggling to balance these expenses with their income, leading to financial stress and poor decision-making.

The rising cost of living also impacts the ability to save for emergencies or long-term goals, such as buying a house or starting a family. Without a financial cushion, Gen Z may resort to taking on debt or making impulsive financial decisions to meet their immediate needs.

Overall, the rising cost of living poses a significant challenge for Gen Z, making it harder for them to save, invest, and make sound financial decisions for their future.

6. Credit Card Misuse

One of the reasons why Gen Z makes poor financial decisions is their lack of understanding of interest rates and credit scores, which often leads to credit card misuse and accumulating debt. Many young adults are not aware of how interest rates work and the impact they can have on their finances. This lack of knowledge makes it easy for them to fall into the trap of impulsive credit card use.

Without a clear understanding of interest rates, Gen Z may not realize the long-term consequences of carrying a balance on their credit cards. They may make purchases without considering the interest that will accrue over time, leading to a significant amount of debt. This can be especially problematic if they only make minimum payments, as the interest charges can quickly add up.

Additionally, credit scores play a crucial role in financial decisions, such as applying for loans or renting an apartment. However, many young adults are not familiar with how credit scores are calculated or the importance of maintaining a good credit history. This lack of knowledge can result in poor financial decisions, such as maxing out credit cards or missing payments, which can negatively impact their credit scores.

To address this issue, Gen Z needs to receive proper financial education that includes topics like interest rates, credit scores, and responsible credit card use. By gaining a better understanding of these concepts, young adults can make informed decisions and avoid the pitfalls of credit card misuse and accumulating debt.

7. Instant Gratification Culture

The instant gratification culture prevalent among Gen Z is another significant factor contributing to their poor financial decisions. This culture is characterized by a strong desire for immediate rewards, which often leads to a disregard for long-term financial goals.

One of the challenges faced by Gen Z is the difficulty in delaying gratification for better financial outcomes. The allure of instant rewards, such as the latest gadgets or trendy experiences, can overshadow the importance of saving and investing for the future. This mindset can result in impulsive spending and a lack of financial discipline.

Moreover, the influence of social media plays a role in perpetuating the instant gratification culture. Platforms like Instagram and TikTok showcase a curated lifestyle of luxury and indulgence, creating a sense of FOMO (fear of missing out) among young adults. This constant exposure to materialistic desires can further fuel the desire for immediate rewards and hinder the development of responsible financial habits.

To overcome the negative impact of the instant gratification culture, Gen Z needs to develop a mindset focused on long-term financial goals. This can be achieved through financial education that emphasizes the importance of delayed gratification and the benefits of saving and investing. By understanding the trade-offs between immediate rewards and long-term financial stability, young adults can make more informed decisions and prioritize their financial well-being. Additionally, cultivating mindfulness and self-control can help Gen Z resist the temptations of instant gratification and make choices that align with their long-term financial goals.

8. Economic Uncertainty

Living through economic downturns can have a significant impact on the financial decisions made by Gen Z. The experience of economic uncertainty can create a sense of fear and apprehension about the future, which in turn influences the choices they make regarding their finances.

One common response to economic uncertainty is a conservative approach to financial decision-making. Gen Z may choose to prioritize saving and avoid taking on unnecessary risks. This cautious mindset stems from a desire to protect themselves from potential financial hardships and ensure their financial stability in the face of economic volatility.

On the other hand, economic uncertainty can also lead to risky choices. Some individuals may adopt a “YOLO” (you only live once) mentality, believing that the future is uncertain, so they might as well take risks and enjoy the present. This mindset can result in impulsive spending, investing in speculative ventures, or accumulating debt without considering the long-term consequences.

Navigating economic uncertainty requires a balance between caution and calculated risk-taking. Gen Z needs to develop financial literacy skills that enable them to make informed decisions based on their circumstances and goals. Understanding the principles of risk management, diversification, and long-term planning can help them navigate economic uncertainties more effectively. By seeking guidance from financial advisors and staying informed about economic trends, Gen Z can make more confident and strategic financial decisions, even in times of uncertainty.

9. Tech Addiction and Subscription Services

Gen Z’s tech addiction and the prevalence of subscription services have a significant impact on their financial decision-making. The constant access to digital platforms and the allure of subscription-based services can lead to overspending and difficulty in distinguishing between essential and non-essential expenses.

Tech addiction plays a role in Gen Z’s poor financial decisions as it often leads to impulsive spending on digital subscriptions and in-app purchases. The convenience and ease of these services make it tempting to subscribe to multiple platforms without considering the long-term financial implications. This can result in a drain on their finances, especially when they accumulate subscriptions that they rarely use or don’t need.

Additionally, Gen Z faces challenges in distinguishing between essential and non-essential expenses due to the prevalence of subscription services. With a wide range of options available, it can be difficult to prioritize spending on necessary items versus indulgent purchases. The line between needs and wants becomes blurred, leading to a higher likelihood of overspending on non-essential items.

To address these challenges, Gen Z needs to develop a sense of financial discipline and prioritize their spending. They should evaluate their subscriptions regularly, cancelling those that are not being utilized or are unnecessary. They need to set clear financial goals and establish a budget that includes a specific allocation for tech-related expenses. By being mindful of their tech usage and making conscious decisions about their subscriptions, Gen Z can avoid falling into the trap of overspending and make more informed financial choices.

10. Family Financial Background

Gen Z’s financial decisions are often influenced by their family’s financial background. The habits and behaviours they observe from their parents can have a significant impact on their own financial choices.

One key factor is the influence of parents’ financial habits. If Gen Z grows up in a household where their parents struggle with managing money or have poor financial habits, they are more likely to adopt similar behaviours. For example, if their parents tend to overspend or accumulate debt, Gen Z may also develop these habits without realizing the long-term consequences.

Another aspect is the limited exposure to positive financial role models. If Gen Z’s parents lack financial literacy or have limited knowledge about personal finance, they may not be able to provide proper guidance and education to their children. This can result in a lack of understanding about budgeting, saving, and investing, making it more challenging for the young generation to make informed financial decisions.

To address these challenges, Gen Z must seek additional sources of financial education and guidance. They can explore online resources, attend workshops, or seek advice from financial professionals. By actively seeking knowledge and learning from positive financial role models, Gen Z can develop a better understanding of personal finance and make more informed decisions.

In conclusion, the family’s financial background plays a significant role in shaping Gen Z’s financial decisions. By recognizing the influence of their parent’s financial habits and seeking additional financial education, Gen Z can overcome these challenges and develop healthier financial behaviours for their future.


In summary, there are several factors contributing to the poor financial decisions made by Gen Z. One of the main reasons is the lack of financial education. Without proper knowledge and understanding of personal finance, young adults are more likely to make uninformed choices.

Additionally, the influence of social media plays a significant role in shaping their spending habits. The constant exposure to curated lifestyles and materialistic values can lead to impulsive purchases and a desire for instant gratification.

Moreover, the burden of student loan debt and the challenges of the gig economy make it difficult for Gen Z to save and invest for the future. The rising cost of living further exacerbates their financial struggles. Credit card misuse, driven by the accessibility of credit, also contributes to their poor financial decisions.

Lastly, economic uncertainty and the allure of tech addiction and subscription services add to the financial challenges faced by Gen Z. Overall, addressing these issues and providing better financial education can help empower Gen Z to make more informed and responsible financial decisions.

By Sir Chike

Sir Chike is an Imo born teacher and actor. He studied at Alvan Ikoku Federal college of Education (AIFCE) Owerri, Imo state. He has obtained the following qualifications; 1. Nigeria Certificate in Education (NCE) in Political Science and Social Studies. 2. Bachelor in Education (B.Ed) in Social Studies