We live in financially uncertain times. Generation Z is resorting to drastic measures to survive, especially to pay off high debts.
A report by Payroll Integrations examined the financial situation of the generations. It surveyed 250 individuals across all age groups about their income and expenses.
According to the report, an increasing number of young people are tapping into their retirement savings or selling personal possessions because the cost of living is steadily rising and salary increases are often absent.
What does the report say? Nearly half of Generation Z workers (46%) have already accessed their retirement savings. The share is significantly lower for Millennials at 31%. However, young people are not depleting their savings to finance vacations or other luxuries, but to cover unexpected emergencies or their high debts.
To afford their rent, an increasing number of young people are also skipping meals. This is reported by a Redfin survey that interviewed 4,000 homeowners and renters: 40% of Gen Z are skipping a meal or restaurant visit to be able to pay their rent.
Generation Z is particularly financially disadvantaged, and there are various reasons for this
Why is Generation Z particularly affected? Young people from Gen Z are hit particularly hard because many could not build financial cushions, and inflation, high rents, and expensive tuition fees put a heavy strain on their monthly expenses. In addition, Gen Z considers saving pointless and prefers to spend their money directly. And this is now backfiring:
- Living costs have risen significantly in recent years, including rent, health insurance, and food. More and more Gen Z individuals live paycheck to paycheck and cannot save.
- Inflation and rising prices for homeownership are leading to many young people not being able to acquire their own properties or prepare financially at all.
- The average income level required to feel financially “healthy” is much higher for Gen Z than for previous generations.
- Gen Z has a higher share of debt, particularly due to consumer goods and education fees. In the USA, credit card debt is about 30% higher than that of Millennials at the same age, and young Germans often do not save adequately for retirement.
- Additionally, the COVID-19 pandemic has eaten away many of Gen Z’s reserves, leaving little financial buffer.
Generation Z is financially worse off in many ways than previous generations: they suffer from high costs, low income, and burdensome debt, while psychological stress and societal trends further exacerbate the situation.
An increasing number of young people want to earn money as content creators. And it is becoming easier to start a career as a content creator and earn a living without a college degree. After all, all you need to get started is a smartphone: Generation Z earns millions with their side jobs, and many young people believe they no longer need to go to college
