Rosalind Evans
In recent years, Generation Z, defined as those born between 1996 and 2012, faces unprecedented financial challenges compared to their parents’ generation. A Bankrate report reveals that about 38% of Gen Z adults and millennials feel more financially insecure than their parents did at the same age. This sentiment is primarily attributed to the current economic climate, characterized by a higher cost of living and stagnant wages. As Laurence Kotlikoff, a professor of economics at Boston University, puts it, “This is a tougher climate, for sure.”
Gen Zers are grappling with an economy that seems stacked against them. According to Bankrate, 53% of them have adopted side hustles to manage monthly expenses, a proportion higher than any other generation. These extra jobs are not just for luxury but a necessity, as fewer Gen Zers can afford to save for the future.
Kotlikoff emphasizes the urgency of the situation: “Parents need to realize that their kids are in trouble.” The economic landscape for Gen Z is significantly more daunting than what their parents faced. Bank of America survey findings support this, with over half of Gen Z citing higher costs as a significant barrier to financial success.
The disproportionate food, housing, and education expenses are added to the burden. Gen Z not only earns less compared to what their parents did at a similar age but also carries heavier student loan debts. The Intuit Prosperity Index study reveals a troubling outlook, with 75% of Gen Z Americans hesitant to set long-term financial goals and two-thirds fearing they may never accumulate enough for retirement.
Despite these challenges, experts like Sarah Foster, an analyst at Bankrate, point out the advantages of youth. She advises Gen Zers to build their financial foundation through prudent investing, debt management, and leveraging compound interest. Matt Schulz from LendingTree echoes this sentiment, comparing financial discipline to maintaining a healthy lifestyle by repeating the right actions consistently over time.
Generation Z’s economic struggle reflects the broader challenges in today’s economy. While they face more significant obstacles than their parents, they also possess the opportunity to reshape their financial futures through intelligent choices and perseverance. As Foster and Schulz suggest, focusing on the fundamentals of personal finance can create a pathway to stability and success despite the harsh economic climate.
