Being debt-averse is not enough. Gen Z needs to understand the big picture of personal finance and investing if they want to thrive.
Only 43% of Gen Z are financially literate, but they’re eager to change that
There’s more to smart money management than just trying to avoid debt—and it is Generation Z’s moment to learn it. Despite the fact that this generation is one of the most debt-averse generations yet, they also scored the lowest in a recent financial literacy study by the TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business.
Although Gen Z respondents averaged the lowest (43%) in answering finance-related questions correctly, no generation demonstrated a particularly high level of financial acumen. On the same survey, just 48% of Millennials, 49% of Gen X and 55% of both Baby Boomers and Silent Generation answered the questions correctly—hardly impressive numbers.
The good news is, Gen Z has the most time ahead of them to make up the shortfalls in their financial knowledge. And tools like Bloom, an app designed specifically for teens and their parents to understand the world of finance, are one way that they’re doing just that.
“At Bloom, we’re trying to bridge this gap and show kids that investing/financial literacy can be fun and really help you in the future,” says Allan Maman, Bloom co-founder and CFO. “When a teen owns $20 worth of a stock, they are way more excited about learning what a stock split is, or a price-earnings ratio, than when they have no skin in the game.”
I recently connected with the team at Bloom to talk about the finance challenges facing Gen Z and how they can make financial literacy their sweet spot. Here’s what they had to share.
With 84% of Gen Z relying on family members for the “how-to” of money management, it’s critical that parents have the right answers to give them. “Every parent wants to make sure their teen is financially literate/prepared for the world when they turn 18, but unfortunately, financial literacy is necessarily as straightforward to teach as something like math or history,” says Maman.
Maman believes that money is not talked about enough in households. “A lot of parents tend to struggle with talking about money/finance with their teens, as they don’t entirely know where to begin, and what the exact curriculum looks like,” he says.
Given the relatively low financial literacy scores among all generations, apps like Bloom are likely giving parents a few pointers of their own as they talk with their teens about their financial future. “A lot of our investing education has been extremely helpful for parents as well,” says Maman.
Given the outsized impact that financial literacy can have on an individual’s life, it would seem that personal finance classes in high school would be a no-brainer. Unfortunately, in many states this is not currently the case. A separate high school finance class is only required in five states, and while another five states require that such a course be offered, it is not mandatory to graduate.
Meanwhile, a further 15 states require that some financial literacy content be embedded within other courses. While that’s better than nothing, it does show how easily a young person can move through high school and into the “real world” without ever having learned the basics of how the world of finance operates.
Something needs to change. “While things like History and Algebra are important classes, financial literacy should be taught alongside these subjects,” says Maman.
Like investors of any age, teen investors come in all types, from the timid to the brash. Neither approach is a recipe for financial success. Here again, awareness of financial structures is paramount both in encouraging the hesitant and tempering those who err on the side of boldness.
Can individuals with a deep-rooted fear of the stock market overcome it? According to Maman, yes—and the best way is to look into the history of the stock market. “Historically, the S&P 500 has returned 10.5% a year since it was created in 1957 through 2021,” he says. “Once you learn more about how specific companies operate, then you have more insight into how things work, and why stocks either grow or decline over time.”
What should a timid investor invest in first? “A very basic strategy that I have is to always put aside some money into the S&P, and then really invest in companies that I personally like that makes products that I use,” Maman says.
On the flip side, of course, are the investors who enter the market overconfident in their ability to play the game. “I once was exactly this way,” admits Bloom co-founder and CPO Sam Yang. “When I started investing a couple of years ago, we were in a bull market—especially for tech stocks. I grew overconfident as I watched my stocks go up and up, and ended up putting in way more money than I should have in a short period of time.”
Ruefully, Yang recounts how the market inevitably came down, bringing with it a significant chunk of his personal net worth. “I had never learned about important concepts like dollar-cost averaging, diversification or budgeting when I was younger, and instead had to learn the hard way once I had started making money,” he says. “This is one of the main reasons why I joined Sonny in building Bloom—I wish I myself had learned about investing much earlier, and that I could have practiced building a portfolio of real stocks as well.”
Today, Yang finds meaning in his work by reflecting how it helps the next generation to learn about investing and money. “This knowledge empowers them to make better financial decisions for the rest of their lives,” he says.
The upheaval caused by the pandemic has inspired 52% of Gen Z to zero in on their financial smarts—the highest percentage of any generation. Though they’re motivated to expand their knowledge and ability in this area, many simply don’t know where to start.
Sonny Mo, Bloom co-founder and CEO, recalls the impetus for the creation of Bloom: his minor brother’s desire for a brokerage account. “His options were limited by products that were designed for a different generation,” says Mo. “How could we possibly expect financial success from the next generation if the tools to support it simply don’t exist?”
Of course, economic conditions today for many people are tough—and getting tougher. “With new economic uncertainties looming large, it’s never been more crucial to be smart with money,” says Mo.
Maman agrees. “With the economy being so fast-changing, there’s no better time to educate yourself on what’s going on, and what’s causing certain things,” he says. “Our message first is always education and safety. Through proper education, teens are able to understand why things are happening; for example, what it means when inflation is at a high.”
In finance, as in so many areas of life, knowledge is power. Building strong financial literacy at a young age will set Gen Z up to find their sweet spot not just in the stock market, but in every dream they want to pursue.

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