in order to keep up high cost of livingmany young people Turn to a possible safety net: their parents.
Nearly half, or 46%, of Gen Z between the ages of 18 and 27 rely on financial assistance from their families, according to a new report Bank of America.
More people (52%) say they don’t make enough money to live the life they want and cite daily expenses as the biggest obstacle to their financial success.
“The high cost of living is definitely impacting Gen Z,” said Holly O’Neill, president of retail banking at Bank of America.
The financial institution surveyed more than 1,000 Gen Z adults in April and May.
Why Times Are So Hard for Gen Z
Many consumers are nervous higher price —especially food, gas and housing. However, those just starting out face additional challenges financial challenges.
They are not only lower salary Adjusted for inflation, they earn more than their parents did in their 20s and 30s, but they also earn more student loan balance.
Even compared to Millennials, Gen Z is spending much more on necessities than young people a decade ago, and other The report shows.
They also have the debt to prove it. The New York Federal Reserve says about 15% of Gen Z have maxed out their credit cards and are at risk of defaulting on their payments, a higher rate than any other generation. May report.
“Delinquency rates suggest increased stress among certain groups,” New York Fed researchers said at the time.
‘High housing costs are definitely a barrier’
In the years since its establishment Severe special infectious pneumonia pandemicBrett House, an economics professor at Columbia Business School, said homeownership has always been one of the greatest tools for creating wealth, and it’s important for those priced out of the housing market to get the same level of access. Financial security is extremely difficult.
“This is a huge challenge for Generation Z in terms of wealth accumulation,” he said.
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Bank of America also found that housing is the expense most young people today need help with, second only to food and groceries.
“The high cost of housing is definitely a barrier for them,” O’Neill said. “We also found that most Gen Zers don’t pay for their own housing.”
Experts recommend consumption Housing expenses shall not exceed 30% of actual salary, but many young people who pay their own way spend much more. Two-thirds of Bank of America respondents said they spend more than 30% of their salary on housing, and nearly a quarter spend more than 50%.
O’Neal said she advises her Gen Z children to follow 50-30-20 rulerecommends spending 50% of your salary on necessities, including food, housing and transportation, 30% on discretionary spending, and the remaining 20% ​​on savings.
Overall, fewer Americans feel financially comfortable
But it’s not just Generation Z struggle. According to another Bankrate survey, most Americans believe their current income is not enough to live the life they want.
Only 25% of adults surveyed said they were completely Financially secureThis is down from 28% in 2023, the report said.
Survey respondents indicated a need Average income $186,000 To live comfortably, Bankrate discovered. But the survey found that to feel wealthy, they need an annual income of just over $500,000, or an average of $520,000.
Likewise, Bankrate said the recent rise in inflation and specific challenges related to housing costs and college affordability are significant barriers to achieving financial security.
Mark Hamrick, senior economic analyst at Bankrate, said: “Many Americans are caught between the ongoing shock of rising prices, a lack of income growth and a sense that their hopes and dreams are disconnected from their financial capabilities. dilemma in time.
