Teaching Gen Z to be smarter with money isn’t easy but it’s profoundly important

In his book Upstream, the New York Times bestselling author Dan Heath reflects on a public health parable where you and a friend are picnicking by a river and hear a shout coming from the water, as a child is drowning. Instinctively you both jump in to save the child, but you then hear another, and so dive in again to the rescue, followed by another, and another and so on. As you continue to rescue the drowning children, your friend wades out of the water, leaving you behind.

‘“Where are you going?” you demand. Your friend answers, “I’m going upstream to tackle the guy who’s throwing all these kids in the water.”’

This parable exemplifies our task in teaching Gen Z how to handle money smartly and responsibly. We have to work upstream, where we can educate them about money, instill rational money behavior and ensure that they develop a healthy mindset around it.

The problem is, as Dan Heath so eloquently says in Upstream, ‘upstream work is hard’. It requires us to plan and prevent rather than react and rescue. There is so much more excitement with the rescue, whereas the prevention bit seems non-newsworthy in comparison. After all, who wants to hear about stuff that didn’t happen when it’s more thrilling to hear about saving people on the brink of bankruptcy?

Upstream work, Heath says, is also ‘slow and maddeningly ambiguous, compared to downstream work which is fast and tangible’. Financially empowering Gen Z is clearly upstream work. It takes time and effort to instill sound money principles, and its effects aren’t always immediately obvious and are often hard to tabulate in the short term.

The need of the hour

Gen Z today spend more money than any generation before them but grow up without any financial education whatsoever. Earning more money without being financially educated just means spending more money in the same ways they’re used to. Societies everywhere are teeming with examples of grown-ups doing this. Why should we think it will be any different with this generation?

Also, many countries around the world have regulations in place that allow youngsters to work, but there is no correlation to these youngsters being more financially savvy as a result.

Simply giving them financial knowledge is ineffective. We need to consider changing their attitudes and mindset. We need to pre-empt their resistance to change, while ensuring that they are able to absorb the learnings and then implement this in their everyday lives, so that they feel truly empowered to make smart financial decisions.

Ignorance is costly

Managing money smartly isn’t something Gen Z are likely to figure out on their own. They might, but it will cost them heavily in terms of time, money and self-confidence. This lack of confidence, according to a research project by Principal Financial Group and renowned behavioral economist Dan Goldstein in their article entitled ‘We make 35,000 decisions per day, but 7 in 10 postpone major financial decisions’, is the primary reason many grown-ups put off making major financial decisions.

It’s not the lack of money, as was previously assumed, it’s lack of the right, confident mindset that being financially educated affords. They commonly put off saving, investing and retirement planning, for example, which has long-term detrimental effects on their financial wellbeing.

Play the long game

We need to be intentional in teaching Gen Z about money. This takes time and intentional effort, on everyone’s part. In a world that promotes and glorifies instant gratification, this isn’t easy, but it’s the only way that works well and for the long term.

That’s the kind of change we need for the next generation. Not fleeting and momentarily inspirational but deep-rooted and life-changing. Success will come, quietly but powerfully, and will reflect not only on their financial lives but in every aspect of their lives, from their relationships and career choices to their mental health and wellbeing. That’s how inextricably linked this issue is.

So, even though preparing the next generation to handle money well is complex, we need to commit to it. Bringing about systemic change is always difficult, but it’s intensely worthwhile; playing the long game always is. That’s exactly why it demands our tenacity and undivided attention.