Gen Z has been relentlessly mocked for not spending money they don't have. Avocado toast, designer bags and luxury holidays— and complain that they can never save enough money for a down payment on a house. But in reality, research shows that the youngest generation of workers is actually in a tougher economic situation.
a new research from a credit bureau trans union People in their early 20s were found to have lower incomes, more debt, and higher rates of delinquency than millennials of the same age.
The study compared credit usage among 22- to 24-year-olds to millennials who were 22 to 24 years old 10 years ago. According to the study, today's 20-somethings earn about $45,500 in take-home pay, while millennials at the same age earned $51,852 a year, adjusted for inflation.
Despite having low incomes, today's young people are being forced to dig deeper into necessities like food and gasoline thanks to inflation, and interest rates are currently high. Highest price in 23 years in the US.
This disparity may explain why Gen Z's incomes are more strained by debt than previous generations. Millennials had about $47,000 of their annual income left over after paying off their mortgage, student loans, and other debt. Meanwhile, Gen Z is left with just over $40,000.
Gen Z's debt-to-income ratio is also higher than in 2013, from 11.76% to 16.05%.
The average credit card balance for 22- to 24-year-olds today is less than 25% higher than that of younger Millennials ($2,834 vs. $2,248), but their mortgage debt has jumped nearly 45%.
In 2013, the mortgage balance was approximately $113,300, which is the equivalent of $149,130 today, adjusted for inflation. By comparison, the average mortgage balance for his Gen Z family in 2023 is $215,150.
“Gen Z consumers are seeing their finances impacted even more by the pandemic and its aftermath than the challenges faced by Millennials as a result of the global financial crisis,” TransUnion says. said Michele Ranelli, Vice President and Head of U.S. Research and Consulting. concluded.
How money affects mental health
With more expenses and less money to pay for them, it's no wonder that today's young people are nearly twice as stressed as their predecessors.
The report found that 14% of Gen Z „feel extremely stressed,“ compared to 8% of Millennials in 2013. Conversely, only 8% of Gen Z are very confident in their financial situation, compared to 13% of Millennials. At their age.
This isn't the first study to show that chasing their tails is taking a mental toll on Gen Z.
Many reports show that today's youth financial dysmorphia and, catastrophic expenditureThey think it's a waste to save for the future, so they're basically throwing away all and some of their cash.
„The future is gloomy so focus only on the present” one Gen Z member previously said. luck.
Sadly, but understandably, in the current climate, a generation that has given up hope on the possibility of reaching major adult milestones such as homeownership, no longer finds meaning in work and is mentally depleted. I am suffering.
Alarming figures reveal that in the UK alone, 9.25 million working-age adults are economically inactive, of which 3 million are registered under the age of 25. not looking for a job. At the same time, more than a third of 18- to 24-year-olds suffer from „common mental disorders“ (CMDs) such as stress, anxiety and depression, and those who are struggling financially are also suffering mentally. He is also the person most likely to be. .
Louise Murphy, senior economist at the UK think tank Resolution Foundation (RF), previously said: luck: „18-24 year olds are now more likely to experience common mental disorders than any other age group, and it is the least qualified young people and non-graduates who face the worst economic impact. have significant mental health problems” are more likely to be unemployed than their graduate colleagues. ”