Are Gen Z really worse off than previous generations?

The financial landscape has shifted dramatically over recent decades, leaving Generation Z (those born between 1997 and 2012) facing a unique set of challenges compared to their parents and grandparents. From soaring house prices to student debt and an increasingly complex job market, young adults today must navigate financial hurdles that previous generations may not have encountered at the same stage of their lives.

At the same time, there is an unprecedented transfer of wealth underway, known as the Great Wealth Transfer (or even Bank of Mum and Dad), with many parents and grandparents holding significant financial assets that could play a vital role in supporting the next generation.

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For parents, the question is no longer just how to leave a financial legacy but also how to equip their children with the knowledge and confidence to manage their money effectively. The right conversations and early financial planning can make all the difference in helping Gen Z establish a strong foundation for their future.

A New Set of Financial Challenges

Every generation faces financial pressures, but Gen Z has grown up in an economic environment where stability can feel increasingly out of reach.

Homeownership, once considered a realistic milestone for young adults in their twenties or early thirties, has become far more difficult to achieve. House prices have surged ahead of wage growth, with deposits requiring years of disciplined saving. For many young people, renting well into adulthood is the only viable option, meaning they have less opportunity to build wealth through property ownership.

Sadly, rental costs have soared in recent years, meaning many young adults are forced into living with their parents for longer than they might ideally like, pushing independence further down the road.

Student debt is another significant burden. While previous generations could attend university with minimal financial strain, tuition fees and the cost of living now leave many graduates starting their careers already saddled with considerable debt. At the same time, traditional career paths are changing. The rise of the gig economy and short-term contracts means that many young workers experience financial instability, making it harder to plan for the future or save consistently.

Beyond these direct challenges, there is also the issue of financial education. Many young people enter adulthood with little understanding of saving, investing, or managing debt, leaving them vulnerable to financial mistakes. The earlier they develop financial literacy, the better positioned they will be to navigate these challenges with confidence.

The Role of Parents in Financial Education and Support

One of the most valuable things parents can do for their children is to normalise conversations about money. Many families shy away from discussing finances, whether due to cultural norms, discomfort, or simply a lack of knowledge about how to approach the topic. However, fostering an open dialogue about money from an early age can set children up for long-term success.

The family dinner table is an ideal place to introduce these discussions. Talking about budgeting, saving, borrowing or even explaining financial decisions in real time helps children develop a natural awareness of financial matters. For younger children, this could be as simple as discussing how pocket money is spent and saved. For teenagers and young adults, conversations might focus on the realities of student loans, credit scores, or the importance of building an emergency fund.

Crucially, these discussions should not be one-off lectures but ongoing conversations that evolve as a child grows. Encouraging Gen Z to ask questions and think critically about money can help them make informed financial decisions rather than relying on trial and error.

The Great Wealth Transfer and Its Impact

While Gen Z faces significant financial pressures, they are also poised to benefit from what is being called the largest wealth transfer in history. Over the coming decades, trillions of pounds are expected to be passed down from the ‘baby boomer’ generation to their children and grandchildren, reshaping the financial landscape.

For families with significant assets, careful planning is essential to ensure that wealth is transferred in a way that is both tax-efficient and beneficial for the next generation. Parents and grandparents should consider whether gifts or inheritance might help their children achieve financial security, such as contributing to a house deposit or assisting with university costs. However, support should be accompanied by financial education and know-how. Without the right knowledge, sudden financial windfalls can be mismanaged or even create unintended dependencies.

This is where financial advice plays a crucial role. Whether navigating inheritance tax (IHT), structuring financial gifts, or setting up trusts, working with a financial adviser can help families manage their wealth in a way that benefits both the current and future generations.

Encouraging Smart Financial Habits Early

While parental support can make a significant difference, it is equally important that young people take ownership of their financial future. Encouraging Gen Z to start investing early can be one of the most impactful steps towards long-term wealth building. The power of compounding means that even small investments made in their twenties can grow significantly over time, providing a strong financial foundation for later life.

Many young adults perceive investing as risky or complicated, often assuming it is only for those with substantial wealth. However, with modern investment platforms making it easier than ever to get started, there has never been a better time for young people to explore their options. Even modest contributions to a stocks and shares ISA or a tax-efficient pension scheme can set them on the path towards financial independence.

Parents can support this by demystifying the investment process, encouraging their children to start early, and, if necessary, introducing them to professional financial advice.  A financial adviser can provide tailored guidance on saving strategies, tax-efficient investment options, and long-term financial planning, helping young investors build confidence and clarity about their financial goals. 

Why Seeking Financial Advice Matters 

For parents, working with a financial adviser can help create a structured plan for passing on wealth while ensuring their children are prepared to handle financial responsibilities. For Gen Z, seeking the right financial advice early can provide clarity on how to budget, save, and invest effectively, setting them up for long-term success. 

At TPO, we help individuals and families build a secure financial future through tailored advice and strategic planning. Whether you are a parent looking to support your children or an adult looking to maximise your wealth, our team is here to provide the expertise you need. 

If you want to take control of your financial future, contact us today to learn how we can help you make informed, confident decisions.  

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The details in this article are for information only and do not constitute individual advice.

The Financial Conduct Authority (FCA) does not regulate tax advice or estate planning.

Investment returns are not guaranteed, and you may get back less than you originally invested. Past performance is not a guide to future returns.