Almost half of all Gen Z — people aged 12 to 27 — relies on some form of financial assistance from their family, according to a new survey from Bank of America. Bank of America community banking senior vice president Shannah Stephens joins Wealth! to discuss how Gen Z is handling their personal finances.
“They’re really feeling the strains of the high cost of living, and it’s really taking the toll because of their young age and because they’re so early in their careers,” Stephens explains. However, she notes that about 82% of Gen Z have financial goals, and are increasingly cracking down on their spending to meet those goals. She points to “loud budgeting” as a positive social media trend Gen Z is following:
“Not only are they declining social activities and social opportunities that they can’t afford, but they told us about 38% said they feel very comfortable not only declining, but admitting that they just can’t afford that expense.”
Stephens notes how crucial transparency is as Gen Z has a harder time saving money amid the current economic backdrop. She notes that many Gen Zers are not ready to buy homes, save for retirement, or even begin investing. With these milestones delayed more than their parents’ generations, Stephens stresses the importance of saving early and often.
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This post was written by Melanie Riehl
Video Transcript
Gen Zers are struggling financially.
According to a new survey from Bank of America, don’t come for me, Gen Zers, please.
Almost half of all Gen Z relies on some form of financial assistance from their family to help us take a deeper dive into the survey.
We’ve got Shawna Stevens who is the Bank of America Community Banking, senior Vice president here, Shana.
Great to have you here on the show with us.
OK.
So let’s dive into some of this data because I mean, Gen Z is also like if you split it up, sure there’s the upper half of Gen Z that is entering into the workforce and then the kind of lower half of Gen Z still young enough to be I think in middle school or you know, early high school.
So I mean, there is still that reliance on their parents.
But what are we seeing in terms of the fundamentals of how those kind of financial constructs are starting to take shape for this generation?
Great question.
Thank you so much for having me with the Gen Z in our study, we started at 18, we went from 18 to 27 with our study in terms of what we were looking at with our Gen Z.
And what we were seeing is exactly what you just said.
They’re really feeling the strains of the high cost of living and it’s really taking the toll because of their young age and because they’re so early in their careers, certainly.
And when you think about how this generation compares to previous generations at this juncture, what did you find at this juncture?
What we’re seeing is it’s somewhat comparable, but they are facing some headwinds that some other generations did not have to face given some of these high costs of living.
But we are seeing some things with Gen Z that are giving us a lot of uh a lot of um we’re really optimistic and we’re seeing behaviors with Gen Z that we haven’t seen in other generations.
Interesting.
Ok.
So let’s break down some of those behaviors because this is a generation that’s had more access to technology, more action, the access to being connected with people with um with data, with information and entertainment as well more than generations prior.
So how is that being utilized to also form their own understanding or, or good money habits?
They’re really taking their finances under their own wings and taking control of it.
What we’re seeing with Gen Z is the majority, about 82% of our Gen Z actually have financial goals.
So they actually have a financial roadmap that they’re following.
The other thing that we’re seeing with Gen Z with everything that they have at their fingertips is they’re making the right adjustments so that they can cope with these high costs of living.
And the steps that they’re taking is they’re, they’re looking at dining out and they’re passing on those, they have events with friends and if they can’t afford them, they’re also passing on those.
And when they’re choosing grocery shopping, they’re even looking at more affordable grocery uh shops to do their grocery shopping.
We talk about the fact that they have access to social media and some of the social media trends have been negative in the past.
But what we’re seeing and again, that gives us so much optimism is loud budgeting.
So with our Gen Z, not only are they declining social activities and social opportunities that they can’t afford, but they told us about uh 38% said they feel very comfortable, not only declining but admitting that they just can’t afford that expense.
Yeah, it’s very transparent on their part.
Uh shameless transparency uh and healthy as well.
So with that in mind, what is that set up for the trajectory once they get into some of those peak earnings years?
It’s right now, what we’re seeing though is that Gen Z are saying that they aren’t able to save.
So if you think about planning for those peak years, there are traditional milestones that you tend to hit such as buying a home saving for retirement and what the Gen Z’s told us in their study, about 50% aren’t on track to buy a home in the next five years.
They also said about 46% that they’re not actively saving for retirement.
And then another 40% really shared that they don’t anticipate that they’d start to invest in the next five years.
So with those traditional milestones being delayed, that does cause a bit of concern.
But the key thing that Gen Z needs to understand is this importance of budgeting and to start saving and start saving frequently and often, Shana Stevens, who is the Bank of America Community Banking, senior vice president.
Great to have you here on the show with us.
Thanks for breaking down some of these findings.
Thank you for having me.
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