Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
A comparative study of Financial Literacy level of
Generation Z and Millennials
Megha
Research Scholar,
Haryana School of Business, Guru Jambeshwar university of science
and Technology, Hisar, India.
Gupta, P.
Professor,
Haryana School of Business, Guru Jambeshwar university of science and
Technology, Hisar, India.
ABSTRACT
Financial literacy is the first step towards building an investment attitude. Broadly, the financial
literacy of a country contributes significantly in the capital formation for its economy. This study
investigates empirically about the financial literacy level of the Generation Z and Millennials.
Generation Z represents people who are born between 1997 to 2012 and Millennials represent the
people who are born between 1981 to 1996. It is apparent in the existing literature that the
Generation Z has better literacy and are more vigilant to invest. This study is empirical in nature
in which data were collected from 140 respondents (70 from Generation Z and 70 from
Millennials). Results of these studies show that there is a noticeable difference between the level
of financial literacy between Millennial and Generation Z.
Keywords: Millennial, Generation Z, Financial Literacy.
Introduction
Financial Literacy leads to the investment and investment help the economies in the Each and
every generation has its own influence on the economy. But millennial or the Generation “Y” have
grown up at a time when rapid economic changes are happening. This has given them higher
expectations for career as compared to the previous generations. In fact, millennial is poised for
reshaping the economy. They are entering the workforce at such a time when the economic
instability is high. They are approaching the crucial point of the process of taking financial
decisions. Millennials are also often known as instant gratification generation. This generation has
very high expectations from the personal and professional lives. High optimism and supreme
confidence are some of the most significant characteristics of this generation. It indicates about
the level of professional achievement they have. With high and unrealistic aspirations, the
millennial are even prone to higher than the average level of disappointment. According to research
millennial are dissatisfied the most with the current earnings as compared to their ability to have a
desirable lifestyle. They also belong to the generation which is completely digital. It has been
raised amidst laptops and computers and cell phones and the other rapidly advancing technologies
which is completely changing way individuals are interacting and conducting
business(Annamaria and Tufano, 2015).
Amongst all the other things, technology is also altering where and the way millennial receive the
information with internet, displacing the newspapers as well as television as a source of news.
Global interconnectedness has made millennial completely dependent on their peers for motivation
and information too. Very soon millennial would make up biggest share of labour force too. It has
been projected that approximately by 2025, 3 out of every 4 workers across the globe would be
millennial. Their financial planning would affect global economy as compared to the financial
planning of their proceeding generations. For understanding the way millennial are prepared for
handling the process of taking financial decisions, some studies have been done. These studies
http://jier.org 1722
Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
examine the extent of financial literacy that young generations have across the globe. Also the
factors related to financial knowledge of the millennial are important here. Talking about
Generation Z, it is facilitated enough for making sound financial planning (Cwynar, 2020).
Generation Z belongs to the people who are born after 1990s. the are the most tech savvy people
and are keen to learn more in the shorter span of time. Being well connected with the various types
of media channels digital and others, and social media, they have more exposure and are the active
participants of the information Dissemination. Gen Z members may be considered as the children
of the Gen X. It is not necessary that the Gen Z has adequate and mandatory knowledge of digital
mediums but as compared with all other generations they are more connected.
Literature Review:
Generation Y is the generation of millennial or the millennial generation. This generation uses a
lot of communication that happens instantly. It includes instant messaging, SMS, emails, etc. It’s
mainly because generation Y is the generation which grew up in such an era when internet is on a
boom. Further, it has been revealed that talking about the characteristics of the generation Y, it is
different for every individual on the basis of where they grew up, the economic and the social
strata of their family, the pattern of communication they followed, etc. All these are quite open as
compared to the previous generations, and the fanatical social media platforms users. Their lives
are mainly influenced by the technological advancements, they are more open to economic and
political views. Thus, they seem to be reactive to the changes happening in the surroundings and
they have better attention towards wealth. The Generation Z on the other hand is youngest
generation which has just made its way into the workforce.
This particular generation is generally known as the regeneration or the “Internet Generation”
(Aboagye and Ji, 2018).
This research study objective is to survey the effect of financial literacy and savings motivation on
financial management behaviours of millennial students. Research defines information about
effect of various strategies that can encourage financial well-being of Millennials and to inform
policymakers, various education groups and financial institutions in providing more effective
financial literacy initiatives for this age of people.( Amaria, N. P., & Rahmawati, S. D. 2024).
Gen Z is excessively social through the cyberspace. The Generation Z has certain similarities with
the Generation However, the Generation Z can simply do a lot of activities together. In simple
words we can say that they can multi task like run social media through their cell phones, browse
the PC and listen to music all at once. Whatever they do is done mostly through cyberspace. Since
their childhood only, this generation recognises technology and it’s also familiar with the
sophisticated gadgets which affect their personality indirectly. According to a survey done by the
Forbes magazine on the Generation Z, about 50 thousand kids were surveyed. On the basis of the
results of the survey it may be said that the Generation Z is one of the first real global generations
(Allgood and Walstad, 2016).
According to OECD (Organisation for Economic Cooperation and Development), financial
literacy maybe defined as the combination of skill, knowledge, awareness, behaviour and attitude
which is important for making sound financial planning and ultimately for achieving financial
wellbeing of the individual. From the definition, it may be seen that financial knowledge isn’t that
simple and it is not possible to measure it so easily. According to the suggestion given by OECD,
its measurement is done particularly by three dimensions including financial behaviour, financial
attitude and the financial knowledge (Lekhnath and Anong, 2017).
For having an effective financial attitude, it means possessing favourable state of mind, judgement
and opinion regarding the economic beliefs of the person. Once actualised, it becomes the financial
behaviour that is the way through which an individual acts and behaves on her or his finances.
http://jier.org 1723
Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
Meanwhile, an individual having financial knowledge comprehends some of the major financial
concepts. The 5 main concepts which have been included in financial knowledge dimensions are
compound interest, simple interest, effect of inflation on the price, time value for money and effect
of inflation on the investment return (Cwynaret.al. 2019).
It has also been proposed that people who are literate financially are more likely to have a prudent
financial plan. They would express it through their investment and savings behaviour. Also, low
financial literacy influences their ability to have good savings and also that ignorance regarding
the basic financial planning concepts is related to insufficient wealth. Improving the financial
literacy of an individual might be the solution for the issue. It has also been seen that financial
literacy helps in improving the compulsive behaviour of buying. Lastly, on the macro level,
financial education has been seen to ameliorate the financial inclusion at the country level (Finke,
Howe and Huston, 2017).
Materialism has also been studied widely from different viewpoints like education, marketing,
psychology, social anthropology, etc. Regarding the behavioural finance, it’s been seen that the
people who have better and high materialistic values have high financial worries as well as a good
amount of debts too. Further, it has been explained that materialism also influences the issue of
credit card, thereby increasing propensity to do impulsive buying (Terri and West, 2016).
In case of children, materialism causes excessive consumption as well as impulsive buying. It is
the predictor for compulsive buying pattern amongst the adolescents. The students who have a
high level of materialism have low level of academic achievement and engagement.
The empirical findings show how materialism helps in altering behaviour of individuals
specifically concerning their spending pattern. The materialistic individuals give high significance
on and they also spend more for materialistic goods for achieving the goals of their life and the
desired state. Excess spending would mean lesser savings since savings are the main difference
between consumption and income (Gambleet.al. 2015).
However, some researchers also give a very interesting and contrasting view about materialism. It
has been argued that materialism is a very important part of collectivistic culture and it might even
benefit the entire society. It might even happen that the people having very high materialistic value
would be diligent for obtaining money for consumptive requirements.
On the basis of the significance of financial education for determining the wellbeing, prevalence
of social networks amongst the Generation Z and potentially negative impact of materialism,
researchers have tried to assess the impact of financial education and materialism on the decision
of savings of the Generation Z (Karakurumet.al. 2019).
In the past few decades, the employers and the governments have transferred responsibility for
savings and investment to the individuals. For instance, a reduction in the state sponsored pension
scheme in some of the countries signifies that individuals should save for having financial security
post-retirement. Reducing generosity of the welfare system and an increasing expectancy of life
have also contributed towards an environment wherein it becomes difficult to attain financial
security post-retirement. Expectancy of life is high and it is continuously increasing. This means
that younger generation today will have to support itself for a longer time as compared to their
previous generations (Tae, Anderson and Seay, 2019).
Also, the financial commodities have now become quite complex. They are also widely accessible
because of digital technologies and globalisation. Financial education is considered to be important
for financial and economic stability for the economy of a nation as well as for an individual. A
http://jier.org 1724
Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
wide range of developments in financial marketplace make contributions to the rising issues
regarding financial education amongst the citizens of nations. The current financial crisis has
proved that ill-informed financial decision happens often because of lack of proper financial
education which might have some severe negative consequences.
Financial literacy is extremely important to Millennials because they have witnessed many
financial decisions that can have a significant impact on their lives. Compared to the options faced
by older generations, the financial options faced by younger generations are more challenging.
Today, people must take greater responsibility for decision-making, such as investing in additional
education or planning for retirement. When making such an important decision, financial
education is crucial.
Financial ignorance might prove to be costly. The consumers who are not able to understand that
interest compounding can incur more fee for transactions, end up with bigger debts. They also
engage themselves in loans which have a higher rate of interest. They also borrow more and save
less (Kobler, Hauber and Ernst, 2015).
Objective of the study
1. To measure the level of literacy of Generation Z and Millennials
2. To compare the financial literacy level among Generation Z and Millennials.
Research methodology
The present study was conducted through survey method in which a sample of 140 respondents
(70 from Generation Z and 70 from millennial) were considered to compare the financial literacy
level among Generation Z and millennial. The respondents were chosen based on convenience
sampling, they were approached online through google forms. Further, the respondents were
clearly informed that if they belong to Generation Z or Millennial, then only they should participate
in this survey. Statistical tools like comparative mean and independent sample t-test were applied
to get the results.
Findings of the study
Table 1 demonstrated the general details of the people that were surveyed to conduct the present
study. The table shows that there is total 140 respondents in which 62.1% are male and rest 37.8%
are female. 50% of the respondents are from Generation Z age group and 50% are millennial.
Among them 56.4% are students and 43.6% are working professionals in which 33.6% are having
a family monthly income of 50,000-1, 00,000/month, family of 42.1% respondents are having a
monthly income of 1, 00,000/month and rest are having monthly income above 2, 00,000/month.
Table 1: General details of the respondents
Variables Respondents Total Percentage
Gender
Male 87 62.1
Female 53 37.8
Total 140 100
Age group
Generation Z 70 50.0
http://jier.org 1725
Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
Millennial 70 50.0
Total 140 100
Occupation
Students 79 56.4
Working professionals 61 43.6
Total 140 100
Family Income
50,000-1,00,000/month 47 33.6
1,00,000-2,00,00/month 59 42.1
Above 2,00,000/month 34 24.3
Total 140 100
Table 2 Comparative Mean Values for Financial Literacy (Generation Z and
Millennial)
SL. No. Financial Literacy Generation Z Millennial
1 I am aware of the investment avenues available 4.29 3.61
2 I know my risk profile 4.25 3.40
3 I know about the concepts like Power of 4.39 3.51
Compounding and Rupee cost averaging
4 I understand the difference between risky and risk- 4.51 3.14
free investments
5 I have done a formal assessment of my future 3.49 3.01
financial needs
6 I am aware of matching my investments with my 4.19 3.09
risk profile
7 I regularly take advise from financial advisor or 4.33 3.13
experts regarding investments
8 I show interest in understanding the new 4.37 3.21
financial products
Table 2 is demonstrating the comparative mean values for Financial Literacy between Generation
Z and Millennial. It is found from the table that Generation Z group are more aware of the
investment avenues available as they are showing higher mean value (4.29) as compared to
millennial with the mean value 3.61. Generation Z is showing higher mean value (4.25) when they
say that I know my risk profile as compared to millennial with the mean value 3.40, Generation Z
http://jier.org 1726
Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
says that I know about the concepts like Power of Compounding and Rupee cost averaging with
higher mean value (4.39) as compared to millennial with the mean value 3.51. Generation Z group
shows higher mean value (4.51) and (3.49) for the statements I understand the difference between
risky and risk-free investments and I have done a formal assessment of my future financial needs
as compared to millennial with the mean value 3.14 and 3.01 respectively. Generation Z group is
showing higher mean value (4.19) when they that I am aware of matching my investments with
my risk profile as compared to millennial with mean value 3.09 and similar results are shown when
Generation Z group says that I regularly take advise from financial advisor or experts regarding
investments with higher mean value (4.33) as compared to millennial with mean value 3.13. The
table also shows that Generation Z shows higher mean value (4.37) and say that I show interest in
understanding the new financial products as compared to millennial with mean value 3.21. Further,
in the study independent sample t-test was applied to test the difference between the level of
financial literacy between millennial and Generation Z.
. Table 3 Independent sample t-test for financial literacy (Generation Z and Millennial)
SL. Statements df t Sig.
No. value
1. I am aware of the investment avenues available 138 3.121 0.00
2. I know my risk profile 138 3.919 0.00
3. I know about the concepts like Power of Compounding and 138
Rupee cost averaging 3.950 0.00
4. I understand the difference between risky and risk-free 138
investments 6.913 0.00
5. I have done a formal assessment of my future financial needs 138 2.288 0.02
6. I am aware of matching my investments with my risk profile 138 5.548 0.00
7. I regularly take advise from financial advisor or experts 138
regarding investments 5.474 0.00
8. I show interest in understanding the new financial products 138 5.028 0.00
Table 3 is showing independent sample t-test to test the difference between the levels of financial
literacy between millennial and Generation Z. It was from the table that the value in the
significance column for all the statements is significant (below 0.05). Hence, there is a significant
difference between the level of financial literacy between millennial and Generation Z.
Conclusion
On the basis of the results of the researches that have been done, it could be concluded that the
financial skills and the financial attitude both have correlation with the behaviour of financial
management. The Millennials having better financial skills and attitude would demonstrate
efficient financial behaviour for managing the money. The results of the studies are consistent as
well as significant which show that there is a very strong relation between the financial behaviour
and the financial attitude. Even though the financial knowledge doesn’t have any prominent
correlation with the financial behaviour, characteristics of the categories show some proximity.
However, it has also been argued that improved financial understanding is considered to be a
http://jier.org 1727
Journal of Informatics Education and Research
ISSN: 1526-4726
Vol 5 Issue 1 (2025)
significant component for fostering efficient financial management pattern. The financially
educated individuals of the millennial generation are able to depict a better financial behaviour for
the economic security as well as well-being. Financially, these people can boost the economic
development of their community.
The study concludes that there is a significant difference between the level of financial literacy
between millennial and Generation Z. Generation Z was found better with respect to all the aspects
of Financial Awareness discussed in this study such as awareness of investment avenues, risk
profile, power of compounding and rupee cost averaging, knowing about risky and risk-free assets.
Similar results were observed regarding the other aspects also. However little less difference was
observed between Generation Z and Millennials regarding formal assessment of future needs but
the difference was found to be significant.
Reference:
1. Amaria, N. P., & Rahmawati, S. D. (2024, July). Influence of financial literacy, financial
attitude, savings motivation on financial management behavior among millenial university
students. In Faculty of Economics and Business International Conference (FEBIC), 249-
259.
2. Annamaria L., and Tufano P., 2(015), Debt Literacy, Financial Experiences, and Over
Indebtedness. Journal of Pension Economics and Finance, 14 (4), 332-328
3. Cwynar, A., (2020), Financial literacy, behaviour and well-being of Millennials in Poland
compared to previous generations: The insights from three large-scale surveys, Review of
Economic Perspectives, 20(3), 289-335
4. Aboagye, J., and Ji Y. J.,(2018), Debt Holding, Financial Behavior, and Financial
Satisfaction.Journal of Financial Counseling and Planning, 29 (2), 208–17
5. Allgood, S. and William B. Walstad,(2016), The Effects of Perceived and Actual Financial
Literacy on Financial Behaviors. Economic Inquiry, 54 (1), 675–97
6. Lekhnath C., and Anong S.,(2017), Spending Behavior Change and Financial Distress
During the Great Recession.Journal of Financial Counseling and Planning, 28 (1), 49– 61
7. Cwynar, A., Wiktor C., Baryła-Matejczuk M., and Betancort M., (2019), Sustainable Debt
Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation
Process. Sustainability 11 (24), 7210
8. Finke, M. S., John S. Howe, and Sandra J. Huston,(2017), Old Age and the Decline in
Financial Literacy. Management Science, 61 (3), 1–278
9. Terri F., and West S.,(2016), Financial Education Is Not Enough: Millennials May Need
Financial Capability to Demonstrate Healthier Financial Behaviors. Journal of Family and
Economic Issues, 37 (4), 649–71
10. Gamble, K. J., Patricia A. Boyle, Lei Y., and David A. Bennett.,(2015), Aging and Financial
Decision Making. Management Science 61 (11), 2603–10
11. Karakurum O., Kamer, Kokkizil M., and Uysal G.,(2019), Financial Literacy in Developing
Countries. Social Indicators Research, 143 (1) 325–53
12. Kyoung Tae K., Somer G. Anderson, and Martin C. Seay,(2019), Financial Knowledge and
Short-Term and Long-Term Financial Behaviors of Millennials in the United States,Journal
of Family and Economic Issues, 40 (2), 194–208
13. Kobler, D., Hauber F., and Ernst B.,(2015), Millennials and Wealth Management. Trends and
Challenges of the New Clientele. Inside. Quarterly Insights from Deloitte, 9, 56–63
http://jier.org 1728
