Cryptocurrencies and Investing: The Top Financial Literacy Education Gaps Across Generations


A recent survey undertaken by Investopedia examined some of the top financial literacy education gaps across different generations.

Today, with ever-increasing inflation, anxiety about whether or not retirement will even be possible, and huge shakeups in the stock market, it’s no surprise many are becoming nervous about their savings.

Emergent technologies like cryptocurrencies and non-fungible tokens promise huge returns, but many generations fail to understand the technologies and their risks. This article will examine the main areas where education gaps exist in finance and investing.

What gaps exist?

Today, 57% of U.S. adults hold investments, but only one-third believe they have advanced knowledge of how to invest. Between generations, knowledge changes depending on the subject. For example, gaps in understanding cryptocurrencies, taxes, retirement, and where to learn more about finance all exist. To address these issues, everyone (younger generations, especially) needs to take their education into their own hands and learn more about finance and investing.

To explore what differences in knowledge exist, we’ll look at some of the broad areas where U.S. adults have the biggest gaps.

What areas of finance are people most knowledgeable about?

Generally, the top areas people feel most comfortable with are consuming, paying taxes, saving, and borrowing/managing their debt. Their weakest areas are retirement, investing, and digital currencies. In fact, 26% of respondents felt they only had beginner-level knowledge of retirement. Similarly, 34% felt they had little to no knowledge of investing.

Between generations, Millennials claim to understand investing the most, with 44% stating they have advanced knowledge of it. 37% of Gen Xers felt they had advanced knowledge, and 31% of Gen Z. Baby boomers came in last, with only 26% feeling they knew enough about investing.

Even though most people think they understand the basics of finance, like spending, budgeting, paying taxes, and saving, very few know digital currencies and cryptocurrencies. In fact, cryptocurrencies, crypto wallets, blockchain technology, and NFTs were among the financial subjects most generations were least familiar with.

Here again, Millennials seemed the most confident in their knowledge about digital assets, with 41% saying they had an advanced understanding of digital currencies. However, as the subjects became more complicated, fewer and fewer were comfortable. 39% felt they could explain cryptocurrency to someone else, and only 25% said they could explain what NFTs are.

Younger generations tend to be the most comfortable with digital technologies overall – 42% prefer to use an online bank for their small business finances.

Where are people putting their investments?

Despite many believing they lack knowledge about different types of investments, that hasn’t stopped the different generations from investing. 54% of Gen Z say they have investments, while the same can be said for 64% of Millennials, 59% of Gen X h, and 43% of Boomers. Stocks make up the largest share of most generations’ investments: 26% of Gen Z, 37% of Millennials, 38% of Gen X, and 27% of Boomers say they own stocks. Mutual funds were also common, with 12% of Gen Z saying they had them. The same was true for 21% of Millennials, 26% of Gen X, and 24% of Boomers.

More complex investments like ETFs, index funds, NFTs, REITs, Commodities, and options were the least common investments across all generations.

Where does crypto fall?

Crypto was again the most divisive investment across generations. Surprisingly, 38% of Millennials indicated that they had investments in cryptocurrencies – more than the amount invested in stocks (37%). In contrast, Boomers came in last, with only 6% stating they had put their money into crypto. Gen X and Gen Z split the difference with 28% and 23%, respectively.

Despite lagging investments, most generations agreed that cryptocurrencies are where they expect to see the greatest yields in the long run. Only Boomers disagreed and thought their stocks and mutual funds would produce the greatest returns. It remains to be seen whether crypto will be viable in the long run.

Which finance skills do people think they need most?

Overall, the finance survey demonstrated that Gen Z has a lot of ground to make up. In an era where public education is struggling, the key may be for Gen Z to take command of their own education. Gen Z, the youngest generation surveyed, admitted they were the least educated regarding insurance, retirement, borrowing, and taxes. In fact, taxes were a key area for Gen Z, with 34% stating it was the most important aspect of financial well-being for them to learn about. However, next in line was reducing debt, with 31% saying that was an important skill for them to learn.

Reducing debt was an area that all generations felt they needed to learn more about. 28% of Millennials, 24% of Gen Xers, and 26% of Boomers agreed that learning how to reduce debt was important to them. Gen Z, and Millennials, the two most educated generations, also have loads of student loan debt to manage. So, it’s no surprise that learning more about managing that debt would be important.

Learning to save for retirement is a key issue for everyone

Finally, retirement was an important issue for Gen X. 30% responded that saving for retirement was an important skill to learn. Gen X is the closest to retirement age, with most Boomers already in retirement or near it. Among Millennials, of whom many are just starting to take steps to buy cars and homes, 28% indicated that saving for retirement was important.

Surprisingly, Gen Z, the furthest from retirement, indicated that 30% of them felt learning how to save for retirement was important today.

When does each generation plan to retire?

The retirement figures reveal a lot about how much each generation knows about saving for retirement. More than half of each generation believes they’ll be able to retire. Boomers who were unretired had a median age of 68 when they expected to stop working. Gen X had a median age of 64, Millennials a median age of 61, and Gen Z a median expected retirement age of 57!

Who will use crypto to retire?

Most generations felt they would use traditional income sources like Social Security and 401(k)s to retire. For Millennials, cryptocurrency topped their retirement plans, with 28% stating they would rely on crypto to support themselves. Interestingly, an overwhelming majority of Boomers (70%) stated they would rely on Social Security. 51% of Gen X identified Social Security as their source of financial support, while that figure was 33% for Millennials and 27% for Gen Z.

Overall, the discrepancies in expected retirement age and reliance on Social Security underline a lack of education and perhaps lack of faith in Social Security. For anyone born after 1960, the full retirement age for Social Security is 67. Benefits may be increased by delaying retirement until 70, and benefits can be taken as early as 62. Many younger generations are skeptical if Social Security will still exist by the time they stop working. In either case, it seems unclear whether or not younger generations understand when their Social Security benefits accrue.

Staying Educated

Staying educated about retirement and other aspects of your financial health is especially important today. Most generations rely on receiving their investing information from friends, family, and the Internet. But with so many generations indicating that they lack knowledge in specific areas, there are huge gaps to be made up for. Whether government Social Security will be available or not, educating yourself on finance and investing is key to your overall financial well-being.