Gen Z shows an alarmingly large appetite for unlawful financial gain, and more than two-fifths are willing to openly lie to commit fraud.
The startling statistic comes from a Sift report published near the end of 2023. It finds 42% of Gen Z respondents (born between 1997 and 2012) were open to disputing a legitimate purchase with payment providers so they could recover money they had knowingly spent.
This is almost double the fraudster level of other generations, with the next highest group — millennials — only 22% of whom admit to first-party fraud.
Gen Zers are undergoing some serious financial growing pains. Struggles with housing prices, student debt, and inflation are making it harder to save. According to a 2024 Deloitte survey, the cost of living is the top societal concern for both Gen Z and millennials. Perhaps many see dabbling in unlawful activity as a way to get in, even in an unfair economy of haves and have-nots.
However, is such reckless behavior appropriate, even at this young age? Financial advisors consider their experience with Gen Z clients and offer insight into how this youthful generation, often lacking substantial income or liquid net worth, can avoid money pitfalls and better prepare for their financial future.
Crimes of Despair?
An inclination to commit fraud may stem from desperation. Widespread economic anxiety can force people to stretch every dollar, whether clipping coupons, thrift shopping, or carpooling.
Yet, young ones may look far into left field for extra savings.
“The immense financial pressures faced by Gen Z and the ‘unfair’ economy might push some to justify unethical behavior as a means of coping,” says Connected Financial Planning founder Arielle Tucker. “Additionally, the anonymity and detachment of online transactions could make disputing purchases seem less severe.”
“It’s crucial to address these ethical lapses with education on financial integrity and the long-term consequences of such actions, both legally and morally,” Tucker adds.
Making Big Bets
Gen Z is more keen on investing than previous generations were at their age, with more starting younger. According to CFA Institute research, one in four Gen Zers started investing before age 18.
Yet, their inexperience makes them more likely to take risks and assume aggressive market positions in the hopes of outsized payouts.
The CFA data says about 41% of Gen Z owns individual stocks. Stock picking diminished after the 2000 and 2008 market bubbles but slowly recovered as memories of the crash receded. Stock picking can be profitable, but achieving desired returns requires the right selections and investment time horizons.
“I don’t necessarily think owning individual stocks is a bad thing if a Gen Z individual is looking at it from a long-term investment perspective,” says Next Mission Financial Planning owner Mike Hunsberger. “I do think excessive trading or using short-dated options is risky and more gambling than truly investing.”
Zoomers’ investments don’t stop with stocks; many young investors are doubling down on virtual assets. 19% of Gen Z investors are exclusively in crypto, not stocks or other traditional asset classes.
“Being solely invested in crypto is a red flag,” says Tucker. “Diversification is key. I would advise Gen Z to spread their investments across various asset classes to reduce risk. Understanding the speculative nature of crypto and balancing it with more stable investments can lead to more sustainable financial growth.”
Crypto is not the only high-risk speculation Gen Z meddles in.
“Another thing I see among the young is the rampant growth of sports betting,” says Hunsberger. “Overall this is the big risky trend I see too many Gen Z (especially males) engaged in. This can truly be a negative as it can lead to addiction and all sorts of financial problems.”
While the cost of hiring a financial advisor feels out of reach for younger generations, advisors like Tucker and Hunsberger have begun offering affordable services to Gen Z clients.
Waste Not, Want Not
Despite edgy investments or flirting with fraud, Zoomers’ other frugal traits prime them to save.
The generations’ thriftiness is more apparent when it helps the environment. Gen Z is the most likely group to shop online secondhand retailers to save money. Nearly half (42%) bought a resale item in the last year.
“I think the use of resale is a good habit as it saves you money and helps reduce the amount of things that end up in the landfill,” says Hunsberger. “I don’t particularly encourage clients to do this, but if they do it I certainly wouldn’t discourage it.”
Zoomers’ worrisome generational trends are likely reflective of navigating a messy financial landscape rather than inherent recklessness. With better information and support, Gen Z can harness their potential and become financially savvy and resilient.
Among financial advisors who serve Gen Z clients, a sense of optimism exists as these professionals see themselves bridging the knowledge gap and providing the necessary tools to help younger individuals and couples make informed financial decisions, ensuring they can thrive even in a complex economic environment.
