To strengthen their finances, Gen Z and millennials are turning to high-risk, speculative asset classes and market categories more and more, which may lead to even more issues.

Gen Z and millennials are increasingly seeking cryptocurrency, prediction markets, and sports betting as ways to improve their financial situation, according to Northwestern Mutual, which claims that younger Americans are "playing with fire."

"Gen Z and Millennials make up the largest share of Americans who are investing in – or are considering investing in – high-risk speculative assets this year. These young adults demonstrate the strongest interest in cryptocurrencies, sports betting, and event-based contracts offered through prediction markets,” according to the asset manager.

Although the 2026 Planning & Progress Study conducted by the company reveals that only 24% of Americans put money into bitcoin and 17% participate in prediction markets or sports betting, those numbers soar to 32% for Gen Z across both categories and 35% and 24%, respectively, for millennials.

Financial pessimism is starting to take hold.

Whether or not Americans realize it, they are engaging in a form of the gambler's fallacy by embracing riskier assets because they feel behind financially, as they are taking on more risk to make up for previous events or mistakes.

“Across generations, a driving factor behind why people are taking greater risks with these investments is because they feel financially behind,” adds Northwestern Mutual.

Additionally, the study highlights that although the percentage of Americans "who feel financially behind and believe high-risk/speculative investments would assist reach financial goals more effectively than traditional methods" is 73% overall, it increases to 80% for Gen Z and 75% for millennials.

The Northwestern Mutual study was released at a moment when brokerage companies, prediction markets, and sportsbook operators are all under fire for targeting young, possibly vulnerable populations and obscuring the distinction between gambling and investing.

PMs and gambling are not excellent ways to earn money

It's understandable why so many younger Americans think they aren't where they should or want to be financially, given the persistent inflation, stagnant incomes, and high student loan debts. Prediction markets and sports betting, however, are not elixirs for accomplishing financial objectives, according to data.

Data shows that only a small portion of sports bettors make money over time, and the majority of retail traders on prediction markets lose money, so those channels may even make financial difficulties worse. As a matter of fact, some users lose money on Kalshi more quickly than they do while betting on sports using typical sportsbooks.

“When people feel behind, they often look for shortcuts,” said John Roberts, Northwestern Mutual’s chief field officer, in a statement. “These high-risk assets can be fun to play with, but that’s why we recommend only spending ‘fun money’ on them. Don’t allocate more than you can afford to lose completely and focus your planning on strategies that have been proven to help people build and protect wealth over the long-term.”