MONEY & LIFE

Financial Literacy Trouble Hamstrings Some Businesses Owners

By: Jenny Montoya · October 02, 2024 · Reading Time: < 1 minute

Entrepreneurship is alive and well in younger generations. But even so, Gen Z and younger millennials struggle with some of the nuts and bolts of starting a business.

Financial Literacy Gap

Roughly 60% of millennials and Gen Z reported financial challenges when running a small business due to insufficient financial literacy, according to a study by cloud-based accounting firm Xero (XROLF). Meanwhile, less than a quarter (22%) of baby boomers reported having the same issue, highlighting a gap in financial literacy across generations.

Outside of business, this has impacted younger entrepreneurs’ emergency planning as well: 23% of younger business owners reported not having a plan in place for unexpected expenses, compared to just 5% of baby boomers.

Boost Your Financial Savvy

For recently launched businesses, the most challenging financial issues include tax planning, budgeting, understanding financial metrics, and staying on top of cash flow, per the study.

Despite struggles in these areas, business owners of all ages seem reluctant to bring on assistance. Per the study, just 16% of small business owners reported using an accountant.

Working with an accountant can improve many facets of a small business, an Axios report on the study suggests. But you don’t always need to pay an expert to expand your financial knowledge either. Improve your small business financial literacy by reading more here.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out


Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

SOSS2410022402

TLS 1.2 Encrypted
Equal Housing Lender