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Indeed it may somewhat be a result of financial illiteracy, but today's young people are significantly better educated than previous generations (https://en.wikipedia.org/wiki/Educational_attainment_in_the_...).

With the cost of education, healthcare, and housing all rising significantly faster than inflation, it's possibly just harder for many to save up that emergency fund. Indeed, it's particularly difficult to justify having an emergency fund if you're also facing five figure 8% interest student loans.

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A difference I've noticed between myself and many of my friends is that I view savings as "Money you don't touch", whereas they view it as "Money you haven't spent yet"

That difference in perception leads to me having a constantly growing bank balance, while they have developed a habit of saving then splurging, repeatedly. Which isn't really building wealth, but more buffering for large pre-planned expenses.

I mostly have your attitude, but it isn't in fact correct. Money saved is to be splurged with latter. However my splurging will be on emergencies or a nice retirement. Anything leftover after the above should be on toys today (though I might need to save for them)

In my case I don't particularly want more toys, which makes my approach easier for me than for others. I personally view it as not needing to work as hard.

I have enough money, and have enough fun, so I can relax a bit rather than pushing myself for more income.

I think a higher number of people taking out five figure 8% loans that aren't used to purchase an education making it relatively painless to pay back, is solid evidence of less financial literacy. There are still ways to get a college degree without taking out 5 figure loans. You just have to go to a cheaper school and work while in college. It's what I did.

I mean, that’s the thing though. Undergrad in state tuition plus R&B for NCSU and UTexas (programs I got in state tuition for) is at 9k and 10k per year with 5% interest for undergraduate, and more like 6-8% for MS students.

You can be employed in a high paying sector like tech after going to an in-state engineering school, and still l end up with $2k tacked on in your first year of employment. So then what is more rational: pay off the loan as fast as possible, or build up an emergency fund with a generous 2% ROI.

The education system does do a poor job of educating people on financial matters, however.

There was just a post on HN the other day about how the top priority for Millenials and Gen Z is travel, so I would say that the younger generations are not significantly better at financial literacy and in fact may have expectations even more out of line with their financial reality than other generations.

https://news.ycombinator.com/item?id=19963476

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