Financial Literacy Trouble Hamstrings Some Businesses Owners

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.

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