In some ways the youngest generation of American adults has opportunity that older generations never did, but that’s often not the case when considering finances.
Gen Z has reached adulthood amid sky-high real estate prices, the burden of student loan debt, and challenging economic conditions – and it means delaying financial goals as they lean on their parents for support.
A new report from Bank of America reveals that the cost of living weighs heavily on Gen Zs with 52% saying they cannot afford the life they want on their current income. That’s not because they covet an extravagant lifestyle, but just because prices mean cutting back on modest experiences such as dining out, attending events with friends, and shopping for groceries at more affordable stores. They have become used to saying no, when finances are over-stretched.
Without help, the financial struggles of Gen Z would be worse. The research found that housing is the big challenge with 54% not paying for this themselves and two thirds of those that do using more than 30% of their monthly paycheck to do so. For two in five, more than half of their paycheck is used for housing.
On a positive note, Gen Zs feel confident that they have the knowledge for basic money management including managing day to day expenses, budgeting, and building/managing credit. Most also have financial goals and over half are prioritizing them.
However, almost six in ten who took part in the survey do not have enough emergency savings to cover three months of expenses, nearly one-third feel they don’t make enough money to save, and just 15% of put a set percentage of their paycheck into a savings account each month.
“Though faced with obstacles driven by the cost of living, younger Americans are showing discipline and foresight in their saving and spending patterns,” said Holly O’Neill, President of Retail Banking at Bank of America. “It is critical that we continue to empower Gen Z to work toward achieving financial health and meeting their long-term goals.”
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