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For Gen Z and millennial individuals in countries all over the globe, anxiety levels are high. Nearly half of Gen Zs (48%) and millennials (44%) say they are stressed all or most of the time, according to the 2020 Deloitte Millennial Survey, released Thursday. The causes of high stress are rooted in financial concerns, family welfare and career expectations. But don’t put the Covid-19 pandemic at the top of that list.
The coronavirus outbreak has brought an economic downturn in the U.S. and globally, and even amid some signs of rebound, uncertainty continues to weigh on the global economy and markets. But since the pandemic began, some younger people have become more positive about their short-term financial outlook and less stressed overall, the annual Deloitte survey found.
Wesley Richardson, a recent graduate of the University of Southern California, said that being home during the pandemic resulted in increased saving and financial awareness. “Now that I’ve graduated, I’ve been thinking about what I want my priorities to be in terms of what I spend my money on once I’m living on my own. Having to sit at home all day and think about what to do with my time has helped me do that. … I don’t really care as much about living a lavish lifestyle; I’m just reprioritizing,” Richardson said.
Millennials and Gen Zs around the world are most worried about finances and careers, according to a Deloitte survey conducted both before and after the pandemic.
2020 Deloitte Millennial Survey
An event like Covid-19 can result in hopelessness, especially when it comes to finances, said Brad Klontz, financial planner and financial psychologist, but that makes it all the more important to take an approach similar to Richardson.
“The biggest challenge is avoiding that learned helplessness feeling, when you have an external locus of control and you have a circumstance that your life is out of control,” said Klontz. “It’s people that are finding ways to find opportunities and have an opportunity mindset — those are the people that are going to come out of this successful,” the behavioral finance expert said.
Michele Parmelee, Deloitte global chief people and purpose officer, said that millennials and Gen Zs around the world are assuming greater personal responsibility for decisions, and that includes finance but also goes well beyond it, to climate, as well as relationships with businesses and employers.
The 2020 Deloitte Millennial Survey was conducted in two waves. The first gathered responses from over 18,000 individuals, including millennials in 43 countries and Gen Z individuals in 20 countries, from November 2019 through the first week in January 2020. A second, smaller “pulse” survey was conducted in April and May 2020, as a result of the coronavirus pandemic, among 9,100 individuals in 13 countries.
It was during the follow-up survey that the anxiety levels were seen to decline. Millennials who said they feel stressed all or most of the time fell by 8%, and that stress decline was matched among Gen Zs.
Financial situation is a major stressor
Finances remain a particular point of stress. The majority of millennials (67%) and Gen Zs (64%) say they often worry about their financial situation, and among both generations, the follow-up survey found a decline in those who believe their personal financial outlook will improve over the next year.
Among U.S. respondents, general financial concerns are even higher, cited by 77% of millennials and 66% of Gen Zs. There were significant declines in the 12-month financial outlook, too, with U.S. millennials who believe their situation will improve dropping from 54% to 42%, and among Gen Zs a decline from 45% to 36%.
Deloitte’s follow-up survey after the virus outbreak began found nearly one third (31%) of millennials and 38% of Gen Zs saying they would be unable to financially recover if faced with a large expense during this time. However, the survey respondents also indicated less trouble paying recent bills, which could come from a combination of ingrained savings habits as well as government financial relief efforts across the globe. Stress levels related to day-to-day finances dropped among members of both generations.
U.S. respondents did stand out as having more trouble paying bills than global counterparts, on average, especially American millennials: In the pre-pandemic survey, 47% said they missed a payment in the past six months; that dropped to 39% in the coronavirus follow-up but was still significantly higher than other generational peers around the world.
Many younger individuals around the globe struggle to meet sudden financial needs, but millennials and Gen Zs have seen some short-term financial relief since the pandemic began.
2020 Deloitte Millennial Survey
While personal stress levels are still high, the decreases recorded by the survey since the Covid-19 outbreak may relate specifically to a decrease in commitments like travel, including commuting, and the more flexible environment created by the sudden, mass migration to remote work, Parmelee said. Changes as simple as having a cat or their kids sitting on their desk beside them do contribute to greater feelings of a “true” self being represented at work, she said. More time with family and a general slowdown in life may also be contributing factors, Deloitte’s survey stated.
Sixty-nine percent of millennials and 64% of Gen Zs said having the opportunity to work from home in the future would reduce stress, and over half of both generations’ respondents (56%) said if they could work remote they would move outside of major cities.
It should not come as a surprise that younger citizens of the world have proven to be resilient, Parmelee said, given the economic maelstroms in which they have grown up and begun their working lives. “They have faced a lot of hardships … during the Great Recession and now here,” she said. “Millennials learned from from the Great Recession. They learned from watching their parents and what they experienced and are more prudent than previous generations. … They need to be more thoughtful, and we know they said they were even before the pandemic.”
The resilience does not mean these generations escaped economic harm from the downturn. For many the pandemic has caused lost jobs or at least reduced hours, reductions in income and bonuses, unpaid leave and withdrawn employment offers.
Millennials and Gen Z workers around the world have seen significant job impacts from the Covid-19 crisis.
2020 Deloitte Millennial Survey
“Certainly, people were impacted in their ability to work, but they demonstrated preparedness in terms of financial responsibility, budgeting, savings and investing and not having a high degree of loans,” Parmelee said.
Millennials taking the initial, pre-pandemic survey said 40% of discretionary spending goes to saving and investing; with “fun” spending at 48%. That saving and investing figure is much lower for Gen Zs (35%), but Richardson’s example suggests that the youngest generation may see the current crisis a prod to focus more on financial security early in their adult lives.
Richardson said he has utilized this time at home to learn more about financial preparedness. “Definitely more conscious about saving. … I’ve been reading books about financial independence. Having to sit at home all day and think about what to do with my time has helped me do that,” the recent USC graduate said.
Klontz said some of the smarter personal finance has been forced. “A lot of people have had to tighten down, a lot of people are making less money and adjusting to that provides an opportunity to have a clearer look on how they are spending their money,” he said. But Klontz added, “Some people have really capitalized on the opportunity. Some people have used this to take a close look at their cash flow, spending habits. … I think people are really getting why they would need an emergency fund.”
As the saying goes: Never let a crisis go to waste.
“This type of crisis provides the perfect opportunity for you to develop a plan,” Klontz said. “Even though the cash isn’t flowing right now, there is a real opportunity to look at developing a plan and paying yourself first and executing on things that matter the most.”
A couple wearing masks sit on a bench watching the sunset over the Manhattan skyline in Domino Park, Brooklyn amid the coronavirus pandemic on May 21, 2020 in New York City.
Alexi Rosenfeld | Getty Images
Parmelee said the high level of anxiety among younger individuals can translate into greater awareness that they can’t afford to take their eye off the ball. Being financially stable and understanding how fast things can change in terms of the outlook is critical, especially early in careers when members of these generations may be starting to support others, both children and aging parents. “They are so conscious they need to remain focused on it,” she said.
The short-term reduction in stress should not be confused with a generally positive outlook among members of these generations. In fact, far less millennials (26%) and Gen Zs (28%) expect to be happier than their parents. And a mood score calculated by the annual Deloitte survey — which takes into account economic sentiment, personal finance, the social/political situation, the environment and the business world’s impact on society — recorded readings of pessimism which increased in the Covid-19 follow-up survey. With a score of 50 representing half of respondents believing progress is being made, both millennials (32) and Gen Zs (35) were well below that mark.
In the U.S. specifically, the millennial score dropped from 52 before the pandemic to 39 during it. For Gen Zs, it declined from 39 to 34.
“They were certainly more pessimistic than in the past, and in the pulse survey, during the pandemic, even less optimistic,” Parmelee said.
—Additional reporting by Kelsey Johnson, CNBC Summer 2020 news intern, and CNBC’s Eric Rosenbaum
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.