Generation Z, born from approximately 1997 to 2012, is showing signs of economic malaise, with nearly half (49%) feeling that planning for the future is “pointless,” according to a Credit Karma poll. Many young adults are adopting a “YOLO mindset,” leading to impulsive spending and potentially high-interest debt, which could delay significant life milestones like moving out or saving for retirement. Experts highlight the importance of cultivating healthy financial habits during this formative period. While investing may seem daunting, even small contributions can yield substantial long-term benefits through compound interest.
The current economic environment compounds this angst; young people face a challenging labor market and elevated debt concerns. Although the overall U.S. unemployment rate is relatively low at 4.2%, it is pragmatically higher for those aged 22 to 27, especially recent college graduates. Approximately 50% of graduates from the 2022-23 class carried an average student debt of $29,300, with federal student debt collections resuming after a five-year pause, adding to their financial stress.
Credit card delinquencies are also rising among Gen Z, with about 15% maxing out their cards, driven by the ease of borrowing options like buy now, pay later services. This financial burden, combined with political and economic uncertainties, contributes to a pervasive lack of optimism among young adults.
Experts encourage Gen Z to reframe their financial approach by viewing this period as an opportunity. Investing in low-cost vehicles like a Roth IRA or 401(k) can significantly enhance future prospects, providing a vital foundation for long-term financial health. Even modest monthly contributions can initiate a path toward financial security.
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