In a recent report by Bank of America, it was revealed that nearly half of Gen Z adults between the ages of 18 and 27 rely on financial assistance from their families to make ends meet. This financial support is crucial for this generation, as 52% of them feel that they do not earn enough money to live the life they desire. The high cost of living is a significant barrier for Gen Z individuals, as noted by Holly O’Neill, president of retail banking at Bank of America.
Young adults today are facing a multitude of financial challenges that are impacting their ability to achieve financial success. Not only are their wages lower than their parents’ earnings when they were in their 20s and 30s, after adjusting for inflation, but they are also burdened with larger student loan balances. Compared to previous generations, Gen Zers are spending more on necessities and carrying more debt, including credit card debt. This has led to increased stress and financial strain among segments of the population.
One of the biggest expenses for young adults today is housing. According to Bank of America’s report, housing is the expense that most young adults need assistance with. Many young adults are spending a significant portion of their paychecks on housing expenses, with two-thirds of those surveyed putting more than 30% of their income toward housing costs. To combat this, experts recommend following the 50-30-20 rule, which allocates 50% of income to necessities, 30% to discretionary spending, and 20% to savings.
It is not just Generation Z that is facing financial challenges. A separate report by Bankrate found that most Americans do not feel financially secure. The report revealed that only 25% of adults feel completely financially secure, down from 28% in previous years. Americans believe they would need to earn an average of $186,000 to live comfortably, and over half a million dollars to feel rich. Inflation, housing costs, and college affordability are significant obstacles to achieving financial security for many Americans.
The financial struggles faced by Generation Z and beyond are a cause for concern. With high living costs, low wages, and increasing debt, young adults are finding it difficult to achieve financial stability. Housing costs, in particular, pose a major barrier for many individuals. It is essential for both individuals and policymakers to address these challenges and work towards creating a more financially secure future for all generations.
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