In today’s society, it is becoming increasingly common for young adults, specifically those in Generation Z, to rely on financial assistance from their parents. According to a report from Bank of America, nearly half of Gen Zers between the ages of 18 and 27 depend on their families for financial support. This reliance on their parents highlights the challenges that many young adults face in being able to afford the high cost of living on their own.
The report also found that 52% of Gen Zers feel that they do not make enough money to live the life they desire, with day-to-day expenses cited as a major barrier to their financial success. The high cost of living, especially in terms of food, gas, and housing, is putting a significant strain on young adults trying to make ends meet. Additionally, wage disparities compared to previous generations, coupled with larger student loan balances, are adding to the financial challenges faced by Gen Zers.
Gen Zers are not only spending more on necessities than previous generations, but they are also accumulating more debt. Roughly 15% of Gen Zers have maxed out their credit cards, putting them at risk of falling behind on payments. This increased debt load is contributing to heightened financial stress among certain segments of the population, according to the New York Fed.
One of the biggest financial challenges for young adults today is the cost of housing. Bank of America’s report revealed that housing is the second most significant expense for young adults, right after food and groceries. Many young adults are unable to pay for their own housing, with two-thirds of those surveyed putting more than 30% of their paycheck towards housing costs, and nearly a quarter spending upwards of 50%. This high cost of housing is a major barrier to financial security for Generation Z.
It’s not just Generation Z that is struggling with financial insecurity. A separate report by Bankrate found that most Americans feel they do not earn enough to live the life they desire. Only 25% of adults said they feel completely financially secure, down from 28% in 2023. The report also highlighted the fact that Americans believe they would need to earn an average of $186,000 to live comfortably, but would need to earn over $500,000 to feel rich.
The financial struggles faced by Generation Z and other young adults in today’s society are significant and multifaceted. From reliance on parental financial support to high housing costs and mounting debt, young adults are navigating a complex financial landscape. As the cost of living continues to rise and income disparities persist, addressing these financial challenges will be crucial in ensuring the financial stability and security of future generations.