Generation Z, those born between 1997 and 2012, is experiencing some of the worst financial stress in recent history. In response, many of them are taking an arguably wild and crazy approach to their spending. According to recent surveys, this has resulted in almost half of Gen Z adults—49%—feeling that planning for the future is “futile.” This all-too-common attitude has led financial experts to sound the alarm on the perils that come with this short-sighted mentality.
Now that the oldest members of Gen Z are in their late 20s, they face a complicated picture. The newly emerging generation is characterized by an intense “you only live once mindset,” in which instant gratification trumps future homeownership. It’s no wonder that experts warn this kind of mentality can drive consumers toward harmful financial practices, such as taking on costly debt. Even more concerning, 15% of Gen Z adults claim they’ve hit the limit on their credit cards. This is a larger share than any other older generations.
The economic malaise that is hitting Gen Z hard is very real. With rising credit card delinquency rates and pervasive feelings of financial “despair” and “hopelessness,” many in this demographic struggle to envision a stable financial future. Student debt makes these challenges even worse. In reality, half of Gen Z bachelor’s degree graduates from the class of 2022-23 entered the job market burdened by an average debt of $29,300.
According to recent data, the unemployment rate for recent college graduates in Gen Z is now 5.8%. Those who do not hold a bachelor’s degree face an unemployment rate of 6.9%. These numbers add to the uncertainty that millions of our nation’s young people are facing right now. Every time they wonder the worth of their degrees as artificial intelligence reaches into every part of life.
Financial experts such as Winnie Sun have explained the emotional burden this constant uncertainty has placed on young adults. “They feel they don’t have any money and many of them are in debt,” she noted. Many Gen Z members express skepticism about the relevance of their education in a rapidly changing job market, leading to further disillusionment.
Given these daunting challenges, financial professionals are advising Gen Z to change their ways and whole-heartedly embrace the world of money management and investment. Courtney Alev emphasizes that “there are a lot of financial implications in the long term if these young people aren’t planning for their financial future and spending willy-nilly however they want.”
Even financial experts have recently advised that beginners should start small with investing. Even contributing $10 a month to a tax-advantaged retirement account like a Roth IRA or 401(k) can yield significant benefits over time due to compound interest. Similar to mindful spending, developing healthy financial habits will help Gen Z avoid wasting money, Future Advisors CEO and founder Alev Scott said during the panel.
Even with the insurmountable odds stacked against them, top experts are telling Gen Z it’s crucial to take proactive measures now to work toward a healthier financial future. Sun suggests a shift in perspective: “Instead of getting into the ‘woe is me’ mode, change that into taking action.” She encourages young adults to “make a plan, take baby steps, and get excited about opportunities to invest.”
First, Gen Z’s current financial outlook is indeed a bit grim. They have the opportunity to initiate that positive change by leading with inclusive, responsible financial practices. As Alev succinctly stated, “You start stacking all these things on top of each other and it can create a lack of optimism for young people looking to get started in their financial lives.”