Here’s How Gen Z Feels About Their Financial Situation Right Now
Down, but not necessarily out. That’s one way to characterize how members of Generation Z are feeling these days about their financial prospects, based on recent surveys and data.
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There hasn’t been a lot of great economic news lately for the generation born between 1997 and 2012. The Washington Post reported this summer that Gen Zers, also known as zoomers, were paying 31% more for housing and 46% more for health insurance than their millennial counterparts were 10 years ago, adjusting for inflation. Many zoomers have also struggled to become homeowners due to low inventory and higher interest rates than millennials dealt with at the same age.
So What’s the Good News?
A recent Insurify survey pointed to a lot of financial frustration for Gen Z, but also to some hope. On the rough side, 23% of respondents said they felt unable to plan for their financial future due to uncertainty, while 11% expressed anger over barriers to financial well-being. Another 8% said their financial prospects left them feeling sad.
On the brighter side, 43% of respondents said they were hopeful their finances would improve.
“I would say many in Gen Z are navigating a tough economic landscape,” said Bola Sokunbi, founder of Clever Girl Finance and author of the “My Wealth Plan” financial workbook. “They are balancing optimism and hopefulness with the reality of high costs, stagnant wages and an uncertain future. The fact that nearly half feel hopeful is encouraging, but the financial stress and insecurity can’t be overlooked.”
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What Are the Challenges?
A recent Bank of America survey highlighted Gen Z’s struggles. Blaming the cost of living, 52% of respondents said they don’t make enough money to live the life they want. Another 37% said they “don’t make good money,” with “good money” defined as enough to cover “most of the non-essential spending they want to do on top of meeting their basic needs.”
In the same survey, 57% of respondents said they get financial help to cover groceries, and 53% said they needed a hand to afford rent and utilities. The primary source of that help? Their parents.
“The numbers paint a pretty tough picture,” Sokunbi said. “Over half of Gen Z needing help with essentials like groceries and rent is a clear sign that basic living costs have grown beyond what many young people can handle. It can be really hard to stay optimistic when you’re maxing out credit cards, feeling like you can’t plan for the future, and struggling with housing costs.”
Similarly, according to the Insurify survey, nearly 50% of zoomers listed housing costs as their biggest financial strain. Grocery costs came next at 38%. These struggles have many zoomers regularly dipping into savings meant for the longer term. It’s a habit that can have serious consequences.
How Can They Be Overcome?
Wendolyn Forbes is a CFP with Wealth Transition Finance, a member of Advisory Services Network, LLC. She offered the following tips to zoomers who find themselves raiding their long-term savings to keep up with expenses.
“My advice is to reflect on your financial journey by examining cash flow, behaviors and goals,” Forbes said. “Assess your income and expenses. Does your income need to increase? Do your expenses need to change? Explore the why behind your behavior of dipping into your long-term savings. What has triggered this behavior?”
She continued, “Consider whether your current goals still align with your aspirations. Have your goals changed so much that the ones originally created fail to motivate? By exploring and understanding these key areas, you may gain valuable insights and make informed decisions to improve your financial well-being.”
Sokunbi pointed to some positive economic trends that may provide some relief for Gen Z, including cooling inflation and the Federal Reserve’s interest rate cut earlier this month. She also sees a resilience in Gen Z that may see them through.
“While inflation has started to cool and the recent Fed rate cuts offer some hope, it’s hard to say how quickly Gen Z will feel any real relief,” she said. “Many are still playing catch-up from the past few years, and it could take some time before these changes make a noticeable impact on personal finances, especially for those dealing with debt or trying to save for bigger goals like homeownership. But with these trends, there’s reason to hope that things will gradually improve.
“Gen Z has proven to be resourceful, often turning to side hustles, and creative ways to manage money,” she added. “The fact that nearly half feel hopeful shows that many are finding ways to navigate these challenges, learning how to take control of their financial futures despite the obstacles. With the right strategies, they can build a more secure financial foundation.”
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This article originally appeared on GOBankingRates.com: Here’s How Gen Z Feels About Their Financial Situation Right Now
