When it comes to money, every generation learns a few lessons the hard way.
Millennials came of age during recessions, a student loan crisis and the peak of avocado toast culture –racking up financial missteps along the way.
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According to Chris Heerlein, CEO of REAP Financial, millennials face significant challenges due to student loan debt, rising living costs and stagnant wages. Many entered the workforce during the Great Recession, leading to high debt burdens while trying to save for retirement and major life goals.
He explained that these financial pressures are compounded by the increasing cost of healthcare and the difficulty of securing affordable housing, making long-term financial stability harder to achieve.
But Gen Z? They’re approaching money with a whole different mindset. From credit card chaos to housing headaches, here are the money traps millennials fell into that Gen Z is (so far) smartly sidestepping.
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Massive Student Loan Debt Burden
According to the Education Data Initiative, millennials have the largest share of total student loan debt despite a declining average balance.
Andrew Lokenauth, money expert and owner of BeFluentInFinance, has watched countless millennial clients struggle under crushing student loans — we’re talking over $50,000 for degrees that didn’t deliver the promised returns.
He said his millennial clients often tell him they felt pressured to attend expensive schools because “that’s just what you did.
“But Gen Z. Man, they’re different. I’m seeing them choose community college first, then transfer to state schools.”
Or they’re pursuing trade schools and certifications — smart moves that’ll save them thousands.
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The Side Hustle Trap
According to Lokenauth, back in the day, millennials bought into this toxic “hustle culture” mindset –burning themselves out working three to four gigs just to stay afloat.
“I still remember one client who was juggling a full-time marketing job, driving Uber at night and selling stuff on eBay,” he recounted. “She was exhausted.”
Gen Z, on the other hand, seems more focused on building actual sustainable businesses or investing in skills that’ll boost their main career trajectory. They’re playing the long game.
Housing Market Timing
“Here’s something that makes me angry: Millennials got absolutely destroyed by housing market timing,” said Lokenauth.
Many graduated into the 2008 recession, couldn’t buy when prices were low, then got priced out when the market recovered.
Meanwhile, Gen Z is exploring creative housing solutions like house hacking and co-living arrangements. Plus, he said they’re way more comfortable staying at home longer to build savings. Less stigma about it.
Investment Hesitation
After watching their parents lose retirement savings in 2008, many millennials developed this intense fear of the market.
“I can’t tell you how many kept their money in savings accounts earning 0.01%,” Lokenauth noted.
Gen Z, however, started investing through apps like Robinhood super early. Sure, some made rookie mistakes with meme stocks, but they’re not afraid to put money to work in the market.
Credit Card Dependency
Lokenauth said this one hits close to home as he’s had many millennial clients with more than $20,000 in credit card debt from trying to maintain lifestyles they couldn’t afford.
“Social media pressure was real,” the expert said.
Gen Z seems more minimalist and intentional about spending. They’re using buy-now-pay-later services more strategically and generally seem less interested in flexing material goods.
The Traditional Career Path Myth
Millennials often got stuck in dead-end jobs thinking they had to “pay their dues.” Lokenauth said he spent five years doing this himself early in his career.
“What a waste,” he remarked.
Gen Z understands job-hopping isn’t bad and they’re way better at leveraging their skills for higher pay. They’re also more likely to start online businesses or monetize their talents directly.
The Emergency Fund Reality
Through his practice, Lokenauth has noticed millennials often prioritized retirement savings over emergency funds — then got crushed when emergencies hit.
Whereas, Gen Z watched this play out and tends to build cash reserves first. They’ve seen how quickly things can go sideways and want that safety net.
Lifestyle Inflation
Many millennials fell into the trap of increasing spending whenever their income went up.
Lokenauth recalls one client who upgraded his apartment, car and wardrobe right after a promotion –then lost his job six months later.
Gen Z tends to be more conscious about lifestyle creep and often maintains their basic living standards even as income grows.
“The thing is, millennials weren’t dumb — they just faced some truly awful timing and received guidance that didn’t match economic realities,” Lokenauth emphasized.
Meanwhile, Gen Z had the advantage of watching and learning from these struggles.
And from what Lokenauth has seen working with both generations, they’re putting those lessons to good use.
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Sources
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REAP Financial, “Who We Are: Our Financial Planning Team.”
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Education Data Initiative, “Student Loan Debt by Generation.”
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BeFluentInFinance, “About Us.”
This article originally appeared on GOBankingRates.com: 8 Money Traps Millennials Fell For That Gen Z Avoids
