The high cost of living has left many young adults, particularly Gen Zers, in a difficult financial situation. According to a report from Bank of America, nearly half of Gen Zers between the ages of 18 and 27 rely on financial assistance from their families. This dependence on parental support highlights the challenges that many young adults face in today’s economy.
The report also revealed that 52% of Gen Zers feel that they do not make enough money to live the life they want. Day-to-day expenses, such as food, gas, and housing, were cited as top barriers to their financial success. This financial strain is further exacerbated by the fact that Gen Zers’ wages are lower than their parents’ earnings were at the same age, and they are burdened with larger student loan balances.
Debt and Delinquency
Gen Zers are also grappling with significant levels of debt. Roughly 15% of Gen Zers have maxed out their credit cards, putting them at risk of falling behind on payments. This is a higher rate of credit card delinquency than any other generation, according to the New York Fed. The increased stress among some segments of the population is reflected in these delinquency rates.
Homeownership, a traditional tool of wealth creation, has been out of reach for many Gen Zers and young adults. Those who have been priced out of the housing market are facing challenges in achieving the same level of financial security as previous generations. This poses a significant obstacle to wealth accumulation among Gen Z.
The Cost of Housing
Housing is one of the biggest expenses for young adults today. Bank of America found that housing is second only to food and groceries in terms of expenses that young adults need help with. Many young adults are spending more than recommended on housing, with two-thirds of those surveyed putting more than 30% of their paychecks towards housing and nearly a quarter spending upwards of 50%.
Financial Security for All
It’s not just Generation Z that is struggling. A separate report by Bankrate found that most Americans feel they don’t earn enough to live the life they want. Only 25% of all adults said they are completely financially secure. Americans cited the need to earn $186,000 on average to live comfortably and over $500,000 to feel rich. Inflation, housing costs, and college affordability were identified as significant obstacles to achieving financial security.
The financial struggles faced by Generation Z and beyond highlight the challenges of today’s economy. From reliance on parental support to high levels of debt and housing costs, young adults are grappling with a range of obstacles to financial success. Addressing these challenges will require a concerted effort to improve wages, reduce debt burdens, and make housing more affordable for all.