It’s the 15th of the month, and a Gen Z woman’s semi-monthly pay lands. Let’s call her Emily.
Before you can spell out “personal finance,” Emily’s banking app automatically moves 10% of her net pay into a high-yield savings account at her online bank, and Coinbase withdraws her $50 semi-monthly automatic investment and buys Bitcoin for her.
Wondering if she can afford to splurge on drinks with friends that evening, she texts her older sister for advice.
Sis says, “YOLO girl! Go for it.”
That night, feeling a bit uncertain about her finances after spending more than she’d intended, she turns to TikTok, checking out some of her favorite finfluencers, looking for a new budgeting hack.
For tens of millions of Gen Z’ers like Emily, money is a very different beast than their parents ever dealt with.
Gen Z, the first generation born after the Internet became “a thing,” are true “digital natives.”
As such, they tend to be bold, early adopters of digital innovations. They’re not afraid of rewriting the rules of personal finance , leaning heavily into fintech, social media finfluencers, financial apps, and, of course, Crypto.
While this is mostly positive, the question remains , are these habits setting them up for long-term stability and financial success greater than their parents could have imagined at the same age?
Or are they boldly striding toward a future of financial fragility?
Gen Z and Personal Finance —The Opportunity of a Lifetime
Routines like Emily’s and those of many Gen Z’ers like her, and their approach to handling their money, demonstrate some of the most promising aspects of today’s financial environment.
Unlike older generations, for whom online banking (or even ATMs!) came late in life and who had to adapt to this new digital reality, Gen Z grew up with all this.
- Investing? Open a Robinhood account.
- Budgeting? Apps galore, such as YNAB.
- Need to pay someone or just contribute your share of the joint restaurant check? Venmo and Zelle to the rescue.
All this low-friction fintech makes budgeting, spending, saving, investing, and transacting in general a breeze , just part of day-to-day life, as easy as asking Alexa to play your favorite music through your Spotify account.
Unlike their millennial older siblings, who hit the job market at the height of The Great Recession, had to pay for college with expensive student loans, and were lucky to find any entry-level jobs in their field, Gen Z’ers display a strong instinct to save aggressively (sometimes called “revenge saving”), and started investing at a far younger age than older generations.
Just recall Emily’s automated savings and investing — she isn’t waiting for “someday” to prepare for an uncertain future. She’s taking action now.
Gen Z’ers don’t tend to believe in “the system.”
- They don’t believe Social Security will be there when it’s their turn to retire.
- They expect their purchasing power to wither faster than traditional investments can grow.
- Most don’t believe in stocks or bonds, let alone big-bank savings accounts earning 0.1% when inflation runs over 9% (year-over-year CPI -U increase from June 2021 to June 2022).
- Worse, many are certain that the CPI published by the Bureau of Labor Statistics (BLS) is a sham, with true inflation running far higher.
This mistrust pushes Gen Z’ers toward alternative investments.
A typical Gen Z investment portfolio looks nothing like their parents’. They’re experimenting with alternative assets such as cryptocurrencies, Non-Fungible Tokens (NFTs), and collectibles, with allocations over 30% becoming normalized.
This begins looking like a “lottery ticket” mentality: small portfolio, long horizon, big, high-risk bet.
According to Finley Williams Law, “Nearly half (49 percent) of the young cohort own cryptocurrencies and 38 percent are interested in owning it. They rank crypto second only to real estate as the top area for growth opportunity, while older investors rank crypto near the bottom for growth potential.”
Older investors would be appalled by such a huge bet on such a risky asset.
However, Gen Z is more than willing to try new investment types, signaling a shift in how wealth is built.
Where previous generations defaulted to the venerated “60/40” stocks/bonds portfolio, Gen Z is writing its own playbook , blending savings, fintech, and digital investments.
All this may work out well for this young generation, potentially letting them far outstrip the wealth levels of older generations at comparable ages. Completely at ease with the newest technologies, they view innovation as an opportunity, not a threat.
Perhaps this is part of the reason that 91% of Gen Z’ers feel they’re completely financially secure or will get there in the future. Only 9% think they’ll never be financially secure. Contrast that with 14%, 24%, and 31% for Millennials, Gen X, and Boomers, respectively.
With Great Rewards Comes Great Risk
It’s an economic truism that higher financial returns come with greater risk.
These days, you can get around 4% nearly risk-free return from short-term US government bonds. The risk that the US will default on its obligations in the next 30 days is as close to zero as you can get in any investment environment.
Climbing up the risk curve a tiny bit, you can find high-yield online savings accounts paying out up to 4.5% annual interest. The risk here is extremely low because the money (up to $250k) is insured by the Federal Deposit Insurance Corporation (FDIC).
And so it goes.
Longer-term US treasuries, say 30-year duration, pay nearly 5% but here the risk that our political leaders will miscalculate and fail to raise the debt limit before the US defaults sometime in the next 30 years isn’t quite as close to zero as it is for the next 30 days.
Investment-grade corporate bonds pay out up to 7.2%, but the risk of default here, while low, is not as near zero as for US government obligations.
The long-term average return of stocks (using the S&P 500 as a proxy for the market) is about 10%, but in any given year, you would be very unlikely to get a return between 8% and 12% — it’s far more likely to be lower or higher than that band.
Crypto in general and Bitcoin in particular, needless to say, enjoyed enormous returns, but with extremely high volatility, in the form of periodic, immense crashes.
Beyond investing risk, Gen Z’s reliance on social media (79%) and their families (35%), and Internet searches (33%) for financial advice isn’t always a good thing.
Let’s start with family…
It isn’t that Emily’s big sis, mom, and dad aren’t well-meaning.
They almost certainly are. It’s just that the average American couple with kids carries a $3,400 credit card debt, an $18k auto loan, and $28k in student loans.
As a result, most Americans chronically under-save for retirement such that by the time they’re at Social Security’s full retirement age of 67 (for those born in 1960 or later), they make under $60k and have a net worth below $133k (excluding home equity).
If you had a choice, is this who you would trust to teach your kids how to manage their money?
How about the other major source of Gen Z’s financial “know-how” , social media like TikTok, Instagram, and YouTube?
These overflow with financial advice, budget hacks, Crypto “sure-thing” tips, and other investing “shortcuts.”
Some of these are genuinely valid, helpful, relatable, bite-sized, and easy to follow.
But others are simply driven by how the finfluencer in question can make the fastest buck, often at the expense of their followers (either because the advice doesn’t apply to most of their audience or is wildly inaccurate altogether).
A digitally savvy teen can go viral explaining how to get rich quickly by “investing” in the next big meme coin. Meanwhile, a seasoned financial advisor, with real credentials, who breaks down real financial and investing strategies, struggles to be “heard” over the digital pandemonium.
As a result, while there’s unprecedented access to information on social media, inconsistent quality fuels a dangerous mix of high confidence with low financial literacy — a perfect recipe for financial disaster.
Then there’s Crypto.
When it works, it’s a homerun.
Investing.com data show that over the last 10 years, Bitcoin delivered enormous returns, but with extreme volatility. From Jan 2011 to Jul 2025, the average monthly return was 13.2%, higher than the S&P 500’s average annual return!
Looking at rolling 12-month periods, the highest was a hard-to-believe 9469%!
If you invested $100 each month in Bitcoin, like our friend Emily, but were around and prescient enough to do it from, say, January 2011 to July 2025, you’d have put in $17,700 and would own just under 600 coins, worth over $67 million!
Even if you started a mere five years ago, in July 2020, that same $100 a month would have set you back $6000, but you’d have 0.17 coins, worth just under $19k , more than tripling your investment!
That $100 monthly auto-purchase looks modest, but it’s a big chunk of what most Gen Z’ers can afford to put aside.
Then, zoom out to the entire generation and you see a stunning exposure level. The CFA Institute says 55% of American Gen Z’ers invest in Crypto assets, with a median allocation of 25%.
That means half invest an even larger portion of their portfolio in Crypto!
Contrast that with the current recommendation from Blackrock, the largest asset manager in the world, with over $11.6 trillion (yes, with a “t”) under management, that Americans should put 1% to 2% of their portfolio in Bitcoin spot Exchange Traded Funds or ETFs (and none in altcoins or NFTs).
That should start giving you a sense of just how much risk these Gen Z’ers are taking on.
To most financial pros, this looks more like a casino-level high-stakes gamble than a solid investment allocation, let alone diversification.
This “lottery ticket” attitude seems to make sense when you’re just starting out, have a minimal portfolio that you feel is wholly inadequate for setting you on the path to reasonable wealth, and have decades ahead of you.
Why not swing for the fences?
You may get lucky, perhaps supremely so.
Or, you could suffer the sort of crashes Bitcoin experienced. The worst one-month return was a drop of 39%. Ouch!
Peak-to-trough, the biggest multi-month crashes were staggering:
- From November 2013 to December 2014, BTC lost 82% of its value before starting to claw its way back up (it took until March 2017, over two years, to return to its pre-crash level).
- From December 2017 to December 2018, it crashed 75% and again took nearly two years to recover, in October 2020.
- A 73% drop between October 2021 and November 2022. That time, it took just over a year, until February 2024, to recover.
And that’s just Bitcoin.
The volatility of altcoins, meme coins, and NFTs is far worse!
As long as you HODLed (held on for dear life) and didn’t sell when your Bitcoin dropped to a quarter of its worth or less, or, on the flip side, didn’t sell when it went up from under a buck in January 2011 to $139 in March 2013 — a massive 278-bagger (to paraphrase Peter Lynch), but missing out on the subsequent 805-bagger to date… you’d be sitting pretty.
And even if you’re a dyed-in-the-wool HODLer, if your finances are fragile, with high levels of student loan and credit card debt, and a minimal emergency fund (if any), you may not have a choice about selling to cover an emergency expense, and that may well happen when your Crypto assets are deep underwater, setting you back years or even decades.
And even if that never happens, who can guarantee there will never be a black-swan event that sinks the entire Crypto sector? It’s never wise to bet your entire life’s savings on a single asset or even asset class.
Sure, you may get lucky, but then again, you may get very unlucky.
Balancing Opportunity with (Prudent) Risk in Gen Z’s Future
In the end, like with Emily, Gen Z’s digital fluency, early savings instinct (starting at age 19, on average, according to Investopedia), courage, innovation, and willingness to experiment could make them the wealthiest generation in history.
But to make that more likely, they need better grounding in the fundamentals of personal finance and investing:
- Making (and following) a plausible budget.
- Saving and investing a large enough portion of income for the future in a properly diversified portfolio.
- Using debt wisely.
- Having a large enough emergency fund in a stable asset like a high-yield savings account (or if in Crypto, at least in stablecoins like USDC, not in BTC or ETH, let alone meme coins).
- Lifelong learning to keep on top of managing their money, and have that learning come from reliable, authoritative sources, not hit-or-miss TikTokers.
None of these is flashy or sexy.
But that’s the point.
They’re meant to keep your finances safe from an 80% loss at the exact time you need to withdraw from your portfolio.
Placing a bet on an asset class that could “go to the moon,” with the associated risk that it may crater into oblivion, can be prudent, as long as it’s just a few percent of your portfolio.
That’s why my own Crypto investment cost is under 5% of our net worth (though it’s grown some, so its current value is a bit higher than that).
As I see it, if Crypto implodes, we’ll need to trim our spending in retirement by a small fraction, but if it goes 10x (let alone Bitcoin’s meteoric rise from sub-$1 to over $100k), it’ll take our net worth from comfortable to seriously wealthy.
Tushar Kumar, Private Wealth Advisor, Twin Peaks Wealth Advisors, observes, “Today’s young people are more engaged with their investments than previous generations. Many are doing some basics phenomenally well: investing in index funds and buying the dips. In fact, there seems to be excitement and an opportunistic mindset about market declines, which I believe is healthy.
“On the flip side, the least prudent things I see Gen Z getting involved with are high-risk options trading and investing in highly speculative assets like meme coins. Certain brokerage firms have made it far too easy to be irresponsible with your money.”
Jason Gilbert, Managing Partner, RGA Investment Advisors, agrees, “The biggest misstep I see is young people confusing speculation or momentum-driven investing with real wealth-building. Gen Z is incredibly curious and experimental, from crypto to meme stocks, but too often, I see herd mentality replace deep thought and fundamental analysis. Without understanding how an investment fits into a broader portfolio or having a safety net in place, even relatively minor market shocks can turn into major financial setbacks.”
The Bottom Line
Gen Z has a lot going for it: more and better tools, access, and opportunities than any generation before.
The challenge isn’t whether they’ll take bold steps — like Emily, they already do. It’s whether they’ll balance that boldness with the steady habits needed to turn a promising start into lifelong financial strength, or, with a bit of luck, generational wealth.
Emilio Cabuto, CFP®, Financial Planner at Verus Capital Partners, agrees but adds a cautionary note, “Gen Z is doing some great things—investing earlier, talking openly about money, and questioning old financial assumptions.
The danger comes when that curiosity is hijacked by hype, whether it’s meme stocks, risky crypto bets, or overly rosy pitches for complex products like Indexed Universal Life insurance (IULs). IULs are often sold as a cure-all—growth, tax-free access, retirement income, protection, but for many low- and middle-income families, they can backfire badly if life circumstances prevent them from fully funding the policy. In those cases, what’s pitched as ‘principal protected’ can actually lead to a total loss of every premium dollar paid.
“The key for Gen Z is not to shy away from bold ideas, but to filter for credible guidance—look for content by experts with designations like CFP® or CPA, who are bound by fiduciary standards. That’s how they can combine innovation and prudence to build wealth that lasts.”
Finally, Scot Johnson, CFA, Principal & Chief Investment Officer at Adell, Harriman & Carpenter, offers some simple yet powerful advice: “Whether for an individual, a household, or a business of any size, cash flow is what really matters, and visuals are excellent for tracking it. Whether it’s a favorite app, an Excel spreadsheet, or even an old-school paper monthly calendar, I love it when younger clients show me how they track cash flowing in or flowing out and when it happens. I think visuals make cash flow easier to follow, and actively tracking it tells me those clients ‘get it.’ If there’s a pinch point at a certain time of month, it’s right there in front of you. If you’re spending too much, it’s right there in front of you. If your savings keep growing – which is the ideal situation – it’s right there in front of you.”
Whether you’re a Gen Z’er or not, are your financial habits setting you up for long-term resilience, allowing you to take prudent advantage of opportunities, or do you go all-in on high-risk bets that may win big, but could crater on Murphy’s schedule — when you can least afford it?
Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the Author
Opher Ganel, Ph.D.
My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.
Learn More About Opher
