Reedies and Money
Gen Z is the most financially illiterate generation, with only 38% of Gen Z (in a sample) answering finance related questions correctly, so why does no one want to talk about money? I’m an economics major and I’m passionate about the finance world beyond six-figure salaries and Patagonia vests, but when I talk about things that are interesting in my classes with my friends, they shut down. Why?
My parents often tell me how money was such a taboo subject when they were growing up, and how it was unspeakable in previous generations. It seems like Reedies have accidentally left money out of our free-thinking and open conversations, which raises questions about our financial literacy.
Baby boomers hold the most generational wealth out of all generations, while Gen Z holds the least. Although this is likely due to the fact that most of us aren’t holding full paying jobs yet, how much are we relying on our degrees or even our parents’ degrees to build us a future? Why haven’t we started building our wealth now?
It's no secret that many Reed students have parents who pay full tuition, and many children of wealthy families attend this school, so this may not apply to them. Despite the existence of this particular chunk of the college population, many students are here on financial aid scholarships. However, how many of those students have opened a Roth IRA, high-yield savings account, or even a credit card account? Very few.
It's true that the American public school system fails to educate youth on financial literacy, but Reedies are supposed to push for more, to dig deeper into failures of the school system. We are supposed to know things that others our age don’t, simply by virtue of wanting to. Finance is not a notably intriguing or invigorating subject. This may be why some who don’t need to worry about money simply don’t bother with the subject, but what about those who do worry about money?
Gen Z has subconsciously followed in the very criticized footsteps of previous generations who were forbidden to talk about financial issues and are thus paying the price for it. So where can you start? My favorite Econ 201 professor Micheal Neubauer recommends opening an investment account and investing long term in low-risk index funds such as the S&P 500 or Dow Jones. This can be done in twenty minutes or less, with no fees or minimums, on your phone if you use apps such as Fidelity, Charles Schwab, Vanguard, and more.
Roth IRAs, the most popular retirement plan, can be opened at the same time as an investment account. You can even use it as your only investment account as long as you don’t take it out, for those who aren’t looking to be the Wolf of Wall Street.
Almost every commercial bank offers a high-yield savings account that can be opened for free, with no minimums, yearly fees, or withdrawal fees, and gives you a 10-20 times higher interest rate than a checking or savings account does.
Financial security doesn’t have to be scary, taboo, or confusing, it's just necessary. Reedies can open up their future by creating space to learn about money, but only if we first open a space to talk about it.