Why does Gen Z have so much debt?
Many are burdened with student loans due to the rising costs of higher education, and they've faced economic instability as they start their careers and often struggle to find secure and well-paying jobs.
More than half, or 53%, of Gen Zers say higher costs are a barrier to their financial success, according to a separate survey from Bank of America. In addition to soaring food and housing expenses, millennials and Gen Z face other financial challenges their parents did not as young adults.
Gen Z Struggles With Mental Health
Social media, which many Gen Zers have used for most of their teenage and adult life, exacerbates these issues — no other generation has had such immediate and unfiltered access to the news for most of their lives, which can lead to stress, anxiety, and other mental health issues.
Notably, a collaborative study by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) has found that only 43% of Gen Z respondents correctly answered questions related to financial literacy, indicating a significant gap in financial understanding within this demographic.
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.
In many ways, Gen Zers are better off than their parents were 30 years ago, but fewer are financially independent — here's why. Compared with their parents at this age, today's young adults are more likely to have a college degree and work full time, according to a recent report by the Pew Research Center.
Less than a third of Gen Z (31%) feel financially secure, with more than half (52%) saying they are very or extremely worried about not having enough money.
However, Gen Z has certain weaknesses. They have a rather indifferent attitude towards security and prioritize convenience over security . They also experience a low perceived behavioral control and lack education on how to behave securely online .
Gen Zers Emerge as Young Investors
The May 2023 report found that 56% of those ages 18 to 25 in the U.S. had at least some investments. The research's findings pointed to the ease of accessing financial information on social media and the growth of investing apps and cryptocurrencies as low barriers.
The World Happiness Report is out and Finland has once again been declared the happiest country in the world. However, the report reveals that Gen Z (aged 15-24) are unhappy.
Is Gen Z in debt?
While Americans of all ages are grappling with higher balances, Gen Z and millennials are seeing the largest average increases in total debt and the steepest decline in credit scores, according to data provided to Fortune by personal finance company Credit Karma on tens of millions of member accounts.
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.
For example, a new study by the Investment Company Institute (ICI) finds that “Gen Z households have nearly three times more assets in the [retirement] plan accounts (adjusted for inflation) that Gen X households did at the same age.” More Gen Z-ers have retirement plans set up and they've saved more in those accounts.
A new survey of 2,000 Gen Zers from the writing platform EduBirdie reveals that while work-life balance and enjoyment are important goals, cash remains king. A full 31% of respondents said their main career aim is to make lots of money.
The rise of Generation Z
However, the group already makes up around 20.66 percent of the U.S. population, and they are said to be the. With the oldest Generation Z members turning 24 this year, a sizeable share will be eligible to vote in the 2022 electorate.
Their economic influence is only expanding, as more of them age into adulthood. These young people not only have this money – experts say they're also willing to spend it, even amid a period of high financial anxiety.
Gen Z is richer than just a few years ago—and much richer than their parents at the same age—but everything costs more and they have more debt, Pew study reveals. Gen Z is making more money than their parents at their age, but they still have to deal with higher costs of buying a home and college.
Millennials stand to become the richest generation in history, after $90 trillion wealth transfer | CNN Business.
She says Gen Z faces more challenges in some ways than previous generations. “There's a growth in inequality in the transition to adulthood. There's a lot of changes in culture and norms, insecurity more generally, in terms of climate change and the war and school shootings and rapid inflation.
Gen Z seems to have a bit of savvy when it comes to the housing market. For example, many Gen Z homebuyers managed to take advantage of lower interest rates in 2020 and 2021. Since then, interest rates have increased to 7-8% depending on the loan. Interestingly enough, that rate hike isn't scaring Zoomers either.
How Gen Z killed the purchase funnel?
Source: Archrival
In reality, many Gen Z consumers aren't buying products impulsively at the point of inspiration. In fact, young people are increasingly using social media as a search engine, to research products they've seen online or IRL and hear from others about the item's fit, quality, packaging and more.
Research from Abacus Cooperative revealed that in 2022, Gen Z adults made an average of 5.3 donations — notably more than the 4.8 made by millennials and 4.7 made by Generation X (Mansfield, 2023).
| Type of spending | Percentage |
|---|---|
| Household bills and expenses | 52.34% |
| Clothes and accessories | 44.07% |
| Going out/entertainment | 37.49% |
| Food delivery/eating out | 36.99% |
Adaptability and Embracing Diverse Workstyles. Gen Z's adaptability is nothing short of astounding. They've seamlessly integrated technology into their lives and work. The gig economy, freelancing, remote work — they've embraced these options to create a work-life balance that suits them.
They're concerned about earning a solid paycheck, gun violence, and being prepared for the future—financially, and otherwise. While 76% of the generation feel they have a lot to look forward to, less than half (44%) feel they are well-prepared for the future.
