Generation Z: Financial Challenges and the Need for Economic Education in Peru

Generation Z, those young individuals born between 1997 and 2009, is facing an economic landscape that is not only challenging but also tests their ability to adapt and learn in the realm of personal finance. This generation, which represents 21% of the Peruvian population and comprises 7.3 million inhabitants, has had to deal with a series of difficulties that have shaped their habits and attitudes toward money. As the socioeconomic context becomes more complicated, it is essential to understand how these young people are navigating a world where economic uncertainty has become the norm. According to data from Ipsos, 44% of young people in this generation are currently in the education phase, while 41% are working. However, 33% are not engaged in either of these activities, suggesting a concerning disconnection from the labor market. This situation is further exacerbated in an environment where 46% of their peers worldwide live paycheck to paycheck and cannot cover their daily expenses. These figures reveal how the struggle for financial stability has become a constant in the lives of young people, who often have to resort to additional jobs to meet their basic needs. The COVID-19 pandemic has left an indelible mark on the labor market, disproportionately affecting the younger population. According to a report from the International Labour Organization, the largest drop in employment was recorded among young people aged 14 to 24, most of whom were employed in the informal sector. This context has created a less productive and more unequal labor landscape, where those who manage to find jobs often do so in small companies that, while they may offer opportunities, have limitations in terms of salaries and benefits. In addition to job instability, Generation Z has had to face rising prices in an economy marked by high inflation rates. In Peru, inflation has risen significantly, reaching 8.46% in 2022, further complicating these young people's ability to cover costs associated with independent living, such as rent and basic services. Given this scenario, it is evident that financial education plays a crucial role in their daily lives. However, despite these challenges, there is a misconception that Generation Z is irresponsible with their money. While it is true that many young people tend to spend on small everyday items, such as coffees or streaming service subscriptions, this does not necessarily translate into a lack of financial awareness. Rather, it is the result of a lack of tools and education in money management, which prevents them from making more informed and strategic decisions about their finances. One of the keys to navigating this difficult financial landscape is financial education. Developing money management skills can not only help Generation Z save and invest but also enable them to build a more secure and stable future. Implementing financial education programs in schools and universities could be a viable solution to equip these young people with the necessary tools to make smart financial decisions. Moreover, Generation Z is in a privileged position by having access to technology, which can be an ally in managing their finances. Apps and digital platforms provide information on budgeting, saving, and investing, making it easier to track income and expenses. However, the key to making these tools effective lies in their disciplined use and the willingness to learn new financial strategies. It is essential to foster an open dialogue about the importance of financial education at home. Parents and educators can play a fundamental role by sharing their own experiences and offering practical advice that helps young people understand the importance of saving and investing. Establishing healthy habits from an early age can be the difference between a precarious financial life and one in which they feel secure and prepared for the future. In conclusion, although Generation Z faces financial challenges that may seem insurmountable, the combination of education, technology, and family support can provide them with a path to economic stability. It is crucial to recognize that, despite the difficulties, these young people have the potential to change their financial narrative by adopting good practices and seeking knowledge. At the end of the day, their success in managing their personal finances will not only benefit them but also have a positive impact on the economy as a whole.