What is the average debt of Gen Z?
'The issue compounds very, very quickly' That said, having the lowest average balances of any generation—around $3,300, according to Credit Karma—means it's easier for young people to make lasting financial change now, Wirick says.
'The issue compounds very, very quickly' That said, having the lowest average balances of any generation—around $3,300, according to Credit Karma—means it's easier for young people to make lasting financial change now, Wirick says.
The average American owed $103,358 in consumer debt in the second quarter of 2023, the latest data available, according to credit bureau Experian.
However, Gen Z has the second lowest average credit utilization rate, despite having the least amount of life experience and a comparatively low average total credit limit of about $19,291. Gen Z uses about $6,600 less credit than millennials, and almost $9,500 less than Gen X.
The estimated average annual earnings for Gen Z are $22,924.68, or $1,910.39 per month. Gen Z spend most of their money on household bills expenses, with 52.3% saying they spent the most money on these costs. The estimated average amount Gen Z spends on socializing is $166.75 per month, totaling $2,000 a year.
Gen Z has several things working against them besides just the state of the economy, housing market, and education system they were born into. They are dealing with a never-before-seen market that relies on instant, digital payments and may fuel impulsive spending.
Gen Z's Financial Reality is an Everyday Struggle
According to research from ConsumerAffairs Research Team (2023): Workers in their twenties today have 86% less purchasing power than baby boomers did at the same age.
Ideally, financial experts like to see a DTI of no more than 15 to 20 percent of your net income. For example, a family with a $250 car payment and $100 of monthly credit card payments, and $2,500 net income per month would have a DTI of 14 percent ($350/$2,500 = 0.14 or 14%).
A good goal is to be debt-free by retirement age, either 65 or earlier if you want. If you have other goals, such as taking a sabbatical or starting a business, you should make sure that your debt isn't going to hold you back.
$5,000 in credit card debt can be quite costly in the long run. That's especially the case if you only make minimum payments each month.
Is Gen Z good with money?
Additionally, 53% of Gen Zers say higher costs are a barrier to their financial success, a separate survey from Bank of America found. And 73% of Gen Z respondents said today's economy makes them hesitant to set up long-term financial goals, according to a recent Prosperity Index study by Intuit.
Most sources agree that Gen Zers were born between 1997 and 2012. So, as of 2023, the Gen Z age range is roughly between 11 and 26 years old.
The news: Gen Z's credit card debt is growing faster than that of any other generation, according to data from Credit Karma.
Generation Z emerges as the least fiscally confident generation, with 28% expressing a lack of confidence in their financial capabilities. According to Bank of America, 85% of those identifying as Gen Z see one or more barriers to financial success. Cost of living expenses tops the list, noted by 53% of respondents.
Of nearly 2,000 Gen Zers asked in a Business Insider survey what they saw as an important goal to achieve within the next five years, 72% said financial security and 27% said starting a family. I don't blame them for choosing to prioritize a solid financial standing rather than becoming a parent.
One common misconception about Gen Z is that they don't have much money. However, based on employment, wages and tax liability data published by the U.S. Government, there are an estimated 7.3 million Gen Zers in full-time employment generating almost $229 billion in annual income.
Despite Increasing Salaries, Gen Z and Millennials Can't Afford Houses. “This is a resilient response to the very dramatic increase in rental burden. The average proportion of a person's income that goes to rent was 25% in 2000, and it's now 40%. That's really a striking increase,” Wachter said.
Generation Z faces an uncertain financial world, and they're well aware they likely won't have the same benefits as generations that preceded them. Roughly one quarter (23%) of Gen Z don't expect to ever be able to retire, according to a recent McKinsey & Company study.
A gigantic wealth transfer over roughly the next decade will likely make millennials "the richest generation in history," according to a report from global real estate consultancy Knight Frank.
Good debt should ideally be in low amounts, low cost, help you achieve your financial goals, and have potential tax advantages.
How much debt is too high?
Generally speaking, a good debt-to-income ratio is anything less than or equal to 36%. Meanwhile, any ratio above 43% is considered too high. The biggest piece of your DTI ratio pie is bound to be your monthly mortgage payment.
Total debt on the balance sheet as of December 2023 : $9.57 B. According to Tesla's latest financial reports the company's total debt is $9.57 B. A company's total debt is the sum of all current and non-current debts.
A life free from debt requires careful planning, a lot of work and even a little luck. Depending on your financial situation, a debt-free lifestyle may not be a goal that's easily attainable.
So, when you hear about people who have absolutely no debt, live on less than they make, and have a stash of cash for emergencies, you might think they're . . . weird. But living a debt-free life isn't only for a special group of people. It's something anyone can do with hard work and some special characteristics.
- Gen Z (ages 18 to 23): $9,593.
- Millennials (ages 24 to 39): $78,396.
- Gen X (ages 40 to 55): $135,841.
- Baby boomers (ages 56 to 74): $96,984.
- Silent generation (ages 75 and above): $40,925.
