Gen Zers are cutting back on spending. More than half, 53%, say a high cost of living is a barrier to their financial success, according to a new survey from Bank America.
Over the last year, nearly four in 10 Gen Z (37%) say they've experienced a financial setback – such as decreased savings or additional debt – causing 27% to borrow money from friends or family.
Today, many Generation Z members — generally classified as those born between 1997 and 2012 — are struggling to keep their credit scores high. Factors like high inflation, student loans, higher interest rates, and slower wage growth are impacting Gen Zers' ability to make ends meet.
The current economy and job market are primary sources of uncertainty for this generation, according to EY's 2023 Gen-Z Segmentation Study. Seeing the wave of massive layoffs in late 2022 through the first half of 2023 has created feelings of distrust toward employers and job insecurity.
Millennials & Gen-Z are Poorer Than Ever (Here’s Why)
Are Gen Z worried about money?
Less than a third of Gen Z feels financially secure while just more than half feels “very or extremely worried about not having enough money," according to a recent study by consulting firm EY.
Gen Z faces unique financial challenges compared to older generations. College graduates earn 10% less compared to their parents, recent research found. High inflation — and affordability concerns among Gen Zers — extend beyond U.S. borders.
Aligning on money is all the more pressing for younger generations, who are earlier on in their relationships and careers—nearly half (49%) of Gen Zers view financial compatibility as more important than physical compatibility. That's compared to 40% of millennials, 35% of Gen Xers, and 30% of baby boomers.
A little more than a third of Gen Z rated their mental health and emotional wellbeing as “poor” or “only fair.” And while people in all generations are experiencing declining mental health, Gen Z is fairing worse than older generations—according to separate surveys of older adults conducted by Gallup.
And while there are plenty of pitfalls and missteps that could plague young people along the way, Gen Z is shaping up to be the most financially savvy generation yet.
The youngest adult generation has relied on 'little treat culture' to get through the day. Now, they're found ways to buy much bigger treats, even with inflation. Young adults are big spenders and big savers. And even with economic uncertainty and stress, the Gen Z generation is not paralyzed by money decisions.
Not much has changed with Gen Z as they're currently clocked with 90% putting money towards entertainment monthly and a 2% increase in those spending over $300 each month.
State of play: 76% of Gen Z surveyed said "they have a great future ahead of them," but just 44% reported feeling prepared for it. 82% believe they will achieve their goals.
A new survey says it has a more positive outlook on homeownership, too. Gen Z is more optimistic about owning a home compared to millennials, per a Redfin survey. Previous surveys found that Gen Z is also ahead when it comes to home purchases.
Older millennials, aged 35 to 44, are the least likely to say they feel “financially well,” according to Bank of America's 2023 Workplace Benefits Report, which surveyed more than 1,300 employees and 800 employers across the country. A full 80% report feeling stressed out by their financial situations.
When asked to rate themselves on a scale of 1 to 10, Gen Z moms feel they're doing better compared to Millennials in areas such as: Focusing on their children's emotional health. Teaching children to be accepting of all. Allowing them to explore their identities.
While the survey indicates that three out of four managers find Gen Z to be the most challenging to work with, Stacie Haller, chief career advisor at ResumeBuilder, suggests that the challenges managers face with this generation may be attributed more to their companies' lack of preparedness.
The National Society of High School Scholars found that 35% of Gen-Z members plan to start saving for retirement in their 20s. Another 10% are planning to save as teenagers. Saving early and methodically making sure they have money well into their golden years is setting Gen-Z up for high career expectations.
Gen Z — the post-Millenial generation, born roughly between 1997-2012 — are mostly in their teens, but the oldest among them is already 22 and by 2025, they'll account for 27% of the workforce. The study shows that for workers ages 18 to 25, the median they have saved — across retirement accounts — is $33,000.
What generation is the least financially literate?
Financial literacy tends to be low within each of the five generations, but particularly so among Gen Z. Two-thirds of Gen Z could answer only 50% or less of the index questions correctly. Within Gen Z, financial literacy tends to be lowest among those who have never attended college.
The most common cause of their anxiety — the future. Almost have of those surveyed said the future was their biggest worry while 45 percent said it was finances. On average, Gen Zers who take medication for anxiety started taking medicaton at 19, according to the survey.
As one of the most philanthropic generations, Baby Boomers have had a considerable impact on the charitable sector. Having lived through significant historical events, many Boomers feel a sense of responsibility to give back to society.
