Gen Z has been relentlessly ridiculed for spending money they don't have on avocado toast, designer bags, and luxury vacations — and then complaining they'll never be able to save enough for a house deposit. But in fact, research suggests that the younger generation of workers is actually worse off financially.
a New study A study from credit reporting agency TransUnion found that those in their early 20s earn less, have more debt and experience higher delinquency rates than millennials did at their age.
The research compared the credit use of 22- to 24-year-olds with millennials, who were 22 to 24 years old 10 years ago. It found that people in their 20s today earn about $45,500, while millennials their age earn $51,852 when adjusting for inflation.
Despite having less income, young people today are forced to dig deeper for basic necessities like groceries and gas due to inflation, as interest rates are currently at a low level. The highest level in the United States in 23 years.
This disparity could explain why debt has a greater impact on Generation Z's earnings than the generation before it: Millennials have about $47,000 left over from their annual salaries after paying off their mortgage, student loans, and other debt. Meanwhile, Generation Z has just over $40,000 left.
Gen Z's debt-to-income ratio is also higher than it was in 2013, at 16.05% compared to 11.76%.
Although the average credit card balance of 22- to 24-year-olds today is 25% higher than that of young Millennials ($2,834 vs. $2,248), home loans are up nearly 45%.
Mortgage balances in 2013 were about $113,300, the equivalent of $149,130 today when adjusted for inflation. By comparison, in 2023, Generation Z has an average mortgage balance of $215,150.
“Gen Z consumers have seen their finances significantly impacted by the pandemic and its fallout, even more so than the challenges faced by Millennials as a result of the global financial crisis,” Michel Ranieri, vice president and head of U.S. research and consulting at TransUnion, concluded.
The effect of money on mental health
With expenses rising and less money to pay for them, it's no wonder young people today are more stressed than those before them.
The report revealed that 14% of Gen Z “feel very stressed,” compared to 8% of Millennials in 2013. On the other hand, only 8% of Gen Z are very confident about their financial situation, compared to 13% of Millennials. At their age.
This is not the first study to indicate that chasing their own tails negatively affects the mindset of Generation Z.
Numerous reports have warned that today's youth have done just that Defect in the form of money They spend destructively – basically all their money and some – because they believe that saving for the future is pointless.
“I only focus on the present because the future is depressing,” a member of Generation Z previously said. luck.
It is sad but not surprising that the same generation that has given up hope that key adult milestones such as home ownership can be achieved in the current climate, no longer see the point in working anymore and are struggling mentally.
Alarming figures reveal that in the United Kingdom alone, 9.25 million adults of working age are economically inactive, including three million under the age of 25 who are registered as not looking for work. Meanwhile, more than a third of 18-24 year olds suffer from a 'common mental disorder' (CMD) such as stress, anxiety or depression – and those who are struggling financially are also the most likely to suffer mentally. .
Louise Murphy, chief economist at the UK Decision Foundation (RF), said earlier luck: “18-24 year olds are now more likely to suffer from a common mental disorder than any other age group – and it is young people with the lowest qualifications who face the worst economic consequences, with non-graduates being significantly more likely to suffer from mental health problems.” They are more unemployed than their graduate peers.