Gen Z is the first generation in America that is making staying at home with their parents, even as adults look cool and normal. It’s a complete U-turn from the old American adage, “When you’re 18, you’re out of the house.” There are many reasons why more and more Gen Zers can’t afford to move out when they turn 18 and the majority of them are economic. But Generation Z Americans are the most financially strapped and challenged generation in history. It’s time to explore briefly exactly what ails Gen Z economically.
Life is Just More Difficult for Gen Z Economically Speaking
America and the West no longer rule the world economy as they have for over half a century. Westerners and Americans have felt the negative economic fallout of that. But no generation feels it as painfully as Generation Z. About 38% of Gen Zers who were recently polled felt that life was more difficult financially and economically than it was for their parents when they were the same age.
Gen Z was born between 1996 and 2012. They have experienced the West’s declining economic and geopolitical positions over the past 30 years first-hand, mainly in the form of rapidly rising prices. The constantly increasing cost of living has prompted 53% of Gen Zers to pick up a side hustle to survive.
No other Western generation in history has had such a high percentage of people working side jobs just to survive. Not surprisingly, few Gen Zers have savings, much less an emergency fund.
Inflation Hasn’t Helped Any
If you have been shopping in American stores post-pandemic, you will notice that the prices of things just keep on going up, and fast, too. Bank of America recently conducted a survey and found that 53% of Gen Zers feel that relentless inflation is destroying their ability to be financially successful.
Gen Zers are struggling to afford basic necessities like food, housing, utilities, and more. What makes matters worse for them is that most of them have a harder time finding and keeping high-paying jobs. Also, they earn much less than their parents did at the same age. Most Gen Zers are financially crippled by huge student loan debt before they even start to earn.
Seventy-five per cent of Gen Zers say they’re delaying major milestones like buying a house, getting married, and having kids precisely because of crushing debt. About 66% of Gen Zers worry that they will never be able to afford retirement.
More and More Gen Zers Can’t Afford to Buy a Home
Since the pandemic, soaring home and rent prices have made homeownership nothing but a distant dream for millions of Gen Zers. about 31% of Gen Zers can’t afford to move out of their parents’ homes. What’s even more stunning is that 25% of Gen Zers live with multiple generations. The cost of borrowing, while having decreased a bit, is still higher than ever at 6.6% for a 30-year fixed-rate mortgage.
There haven’t been as many housing units built since the pandemic. So, more Gen Zers are competing for a dwindling number of available houses. That, of course, drives the cost of housing up substantially.
Baby Boomer Parents Are Footing at Least Part of the Bill for Their Gen Z Children
Parents, often from the baby boomer generation, are still paying at least some of their Gen Z kids’ bills. That’s the case for over half of Gen Zers. Experian discovered that in a recent survey. Most Gen Zers who live in multi-generational households pay just 22% of the bills. The parents spend an average of $1,400 a month paying for Gen Zers essential and non essential bills.
Gen Zers are also falling prey to Buy Now Pay Later plans which is putting them in enormous debt. Many say BNPL plans are creating a generation who buys everything but owns nothing.
Gen Z’s Financial Challenges May Hurt America in the Long-Run
Gen Z is finding that the American Dream that defined America since its founding is now dead. The financial challenges that Gen Z is currently facing may serve as a predictor of America’s long-term economic well-being. Indeed, Gen Z’s economic and financial struggles may be America’s broader economic and financial struggles three decades from now.
