Young Adults Don't Know What To Do With Their Wealth

Millennials and Gen Z are expected to receive trillions of dollars in inheritances. However, there is some apprehension as the younger generations struggle with what to do next with their wealth.

Over $84 trillion dollars is set to transfer to young adult hands from wealthy boomers. Most of these funds, around $72.6 trillion, are set to be gifted to heirs, while $11.6 trillion is going to charity. 42% of the wealth transfer, or $35.8 trillion, is projected to come from ultra-wealthy families that make up just 1.5% of households. 

Talk about wealth inequality.

Boomers don’t seem to want to keep their fortunes as they are giving a bulk of it away, around 6$ of it, to be exact. The rest of the generational classes will inherit it all, from Gen Xers, who are predicted to inherit the most, followed by millennials and Gen Zers. 

However, it seems like the younger generations, especially Gen Z, don’t really know what to do with this new influx of wealth. They are struggling to navigate their student loans, the volatile housing market, and years of inflation to stand a chance at properly utilizing these new finances. Many grew up in an environment where financial education was not afforded to them, leading to a lack of good financial habits. 

Luckily, they have YouTube for that. 

Younger Generations are Set Up Well

Affluent millennials are set up in a much better position. They are predicted to be the richest generation in history after this wealth transfer, and also considering the influx of high-paying jobs in tech, finance, and medicine they are pursuing. 

But back to Gen Z. Many are awaiting their incoming funds with dread. Most Americans feel as though they do not have the financial confidence to manage this much money by themselves. This comes from a survey run by Citizens Bank of 1,500 U.S adults, many of them from the younger generations. These individuals do not feel prepared to take in this incoming money and don’t feel confident that they would be able to utilize it correctly. 

They better start watching those financial YouTube videos quickly. 

Wealth managers will take care of everything for the ultra-wealthy, but those securing a substantial amount of money but not a significant amount will need to get educated fast as the real world is coming for them at a fast pace. Familiarizing oneself with concepts such as long-term financial goal setting, investing, and budgeting will be important to make informed financial choices about their potential inheritance.

Social Media As A Vehicle For Financial Advice

The good news is that the younger generation isn’t afraid of getting advice from a financial professional. That same Citizens Bank survey said that 29% of those inheriting $1 million or more would turn to an advisor. However, the overwhelming majority of Americans distrust bankers, and more than half (51%) of Americans plan to use social media for financial advice. 

Social media can be a double-edged sword, both helping and hurting the younger generations. By using social media, individuals are more likely to receive bad financial advice that can really hurt their finances. It is important for the younger generation to be careful with the content they are consuming online. One can find both a community filled with helpful advice and also one with misinformation and fraud, all on the same social media platform. 

However, a positive social media provides is that it is reshaping the way young people invest and save, introducing the younger generation to financial concepts that are oftentimes out of reach for casual investors. If done right, especially for the ultrawealthy, combining strategies learned online with trained financial professional advice can give younger individuals an edge when managing their finances.

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