53% of Generation Z see high costs of living as a barrier to financial success
Martin-dm | E+ | Getty Images
Generation Zers are cutting back on spending.
More than half, 53%, say the high cost of living is a barrier to their financial success, a study finds New Bank America survey.
Nearly three in four young adults surveyed, 73%, have changed their spending habits in the face of record high inflation.
“A lot of them are giving in,” said AJ Barkley, head of neighborhood and community lending at Bank of America, calling the results “good news.”
More from Personal Finance:
Here is the breakdown of inflation for September 2023 – in one chart
Social Security’s cost of living adjustment will be 3.2% in 2024
Lawmakers are targeting credit card debt, interest and fees
The changes they are making include cooking at home more often, at 43%; spend less on clothing, 40%; and limiting grocery shopping to essential items, 33%.
Most plan to keep these changes in place next year, according to the company’s August survey of nearly 1,200 young adults ages 18 to 26.
Generation Z faces unique financial challenges
However, more than a third of young Generation Z also experienced setbacks last year, the survey found, which may have led them to stop saving or take on more debt.
Compared to older generations, Generation Z faces unique financial challenges. College graduates earn 10% less than their parents, Current investigations revealed.
High inflation — and Gen Z’s affordability concerns — extend beyond U.S. borders. A Deloitte survey Released earlier this year, which involved approximately 14,500 members of Generation Z in 44 countries found that living paycheck to paycheck was a problem for about half of this generation (51%); followed by the need to take on a part-time job, 46%; and cost of living 35%.
“This is truly the time to build a solid foundation”
However, according to a Bank of America study, there is good news. Most respondents are confident in their ability to manage their daily expenses, budget and loans. However, according to the results, they show less confidence when it comes to saving for retirement or investing in the stock market.
“This is truly the time to build a solid foundation that will allow you to be successful in the next decades of your financial life,” said Douglas Boneparth, certified financial planner and president of Bone Fide Wealth in New York. Boneparth is also a member of the CNBC Financial Advisor Council.
Experts say these three tips can help members of Generation Z learn how to manage their money wisely.
1. Make saving a habit
Ute Grabowsky | Photo library | Getty Images
According to a Bank of America survey, more than half of Generation Z, 56%, does not have enough emergency savings to cover three months of expenses.
“It’s a good idea to set aside as much money as you can,” Boneparth said, and think about what’s important to you to stay motivated.
“Get into the habit of saving consistently,” Boneparth said.
When you have this cash cushion, you can continue to pursue your goals even when life throws surprises at you. “It’s never a straight line,” Boneparth said.
2. Start investing for retirement now
While retirement may seem like a distant goal, especially in the early years of your career, Barkley says it’s actually the time when you have the greatest advantage in accumulating wealth.
Any money you invest now has more time to accumulate profits that compound over time.
“You should think about retirement now,” Barkley said.
To start, an employer-provided 401(k) can help with those initial contributions and, if offered, can even include an additional boost from a company match.
Young investors can also open an individual retirement account themselves. Experts often recommend making after-tax contributions to a Roth IRA early because you may be prohibited from contributing to these accounts later in your career when your income is higher.
3. Resist the urge to give in to FOMO
According to a Bank of America study, Generation Z women are more likely to feel pressured to spend money to keep up with their social circles.
Social media is a major trigger for these feelings: 41% of Gen Zer women say their feeds make them wish they had more money for non-essential expenses, compared to just 24% of men.
According to Ted Jenkin, a CFP and CEO of, it would be wise for all Gen Zers to avoid this FOMO oXYGen Financial in Atlanta. Jenkin is also a member of the CNBC FA Council.
“Your friends don’t post their net worth on Instagram and TikTok. So be careful that people may not be doing as well as they appear on social media,” Jenkin said.
It also doesn’t hurt to avoid credit card debt and check your credit score regularly, Jenkin said.
