Gen Z have been relentlessly mocked for spending money they don’t have on avocado toasts, designer bags and luxury holidays—and then complaining that they’ll never be able to save up enough for a house deposit. But in reality, research echoes that the youngest generation of workers really do have it worse financially.
A new study from credit reporting agency TransUnion found those in their early 20s are earning less, have more debt and see higher delinquency rates than millennials did at their age.
The research compared the credit usage of 22 to 24 year olds to millennials, who were 22-24 years old 10 years ago. It found that 20-somethings today are taking home around $45,500, while millennials at their age were earning $51,852 when adjusting for inflation.
Despite earning less, young people today are being forced to dig deep for basic necessities like food groceries and gas thanks to inflation, with interest rates currently at a 23-year high in the U.S.
The disparity could explain why debt is taking a bigger bite out of Gen Z’s earnings than the generation before them: Millennials had around $47,000 of their annual salary left after their mortgage, student loans and other debts were paid. Meanwhile, Gen Zers are left with little over $40,000.
Gen Z’s debt-to-income ratio is also higher than in 2013, at 16.05% compared to 11.76%.
Although the average credit card balance for 22-24-year-olds today is less than 25% higher than for young millennials ($2,834 vs $2,248), mortgages have shot up by nearly 45%.
Mortgage balances in 2013 were around $113,300, the equivalent to $149,130 today when adjusted for inflation. In comparison, in 2023 Gen Zers have an average mortgage balance of $215,150.
“Gen Z consumers have seen their finances significantly impacted by the pandemic and its aftermath, even more so than the challenges faced by millennials as a result of the Global Financial Crisis,” Michele Raneri, vice president and head of U.S. research and consulting at TransUnion concluded.
Money’s impact on mental health
With higher expenses and less money to pay for it them, it’s no wonder young people today are nearly twice as stressed out as those before them.
The report revealed that 14% of Gen Zers are “extremely stressed out”, compared to 8% of millennials in 2013. On the flip side, just 8% of Gen Z are extremely confident about their financial situation, compared to 13% of millennials at their age.
It’s not the first study to indicate that chasing their tails is taking a mental toll on Gen Z.
Numerous reports have warned that young people today have money dysmorphia and are doom spending—essentially splashing all of their cash and some—because they think saving for the future is futile.
“I’m just focusing on the present because the future is depressing,” one Gen Zer previously told Fortune.
Sadly but unsurprisingly, the same generation that has given up hope on the prospect of ever reaching major adult milestones like homeownership in the current climate, doesn’t see the point in working anymore and is struggling mentally.
Troubling figures reveal that in the U.K. alone 9.25 million working-age adults are economically inactive, of which three million under 25-year-olds are registered as not looking for work. At the same time, more than a third of 18-24-year-olds are suffering from a “common mental disorder” (CMD) like stress, anxiety, or depression—and those struggling financially are also those most likely to be suffering mentally.
Louise Murphy, a senior economist at the U.K.’s Resolution Foundation (RF) think tank previously told Fortune: “18-24-year-olds are now more likely to experience a common mental disorder than any other age group – and it is lower-qualified young people who are facing the worst economic consequences, with non-graduates with mental health problems significantly more likely to be workless than their graduate peers.”
FAQs
Gen Z really do have it worse: Those in their early 20s are earning less and have more debt than millennials did at their age. The report also revealed that 14% of Gen Zers are “extremely stressed out”, compared to 8% of millennials in 2013.
Are Gen Z earning more than millennials? ›
Generation Z must contend with 32% cumulative inflation over the past decade. Their average annual income of $45,000 might seem more than the $39,000 of millennials, but adjust millennials' income to 2024 dollars, and it becomes $52,000.
Are Gen Z struggling financially? ›
Over half (57%) of respondents do not have enough emergency savings to cover three months of expenses. Nearly one-third (30%) feel they don't make enough money to save. Only 15% of Gen Z put a set percentage of their paycheck into a savings account each month.
What is one possible explanation for why millennials have significantly less credit card debt than the other two generations? ›
In fact, 32.1% of millennials live with their parents, compared to 14% who live on their own, or, 31.6% who live with a spouse or partner. Once again, this may make it less likely for millennials to seek out debt to begin with, since they likely have fewer living expenses.
Which generation has it worse financially? ›
Compared with millennials at the same age, Gen Z has more debt of all kinds — including credit cards, car loans and mortgages — after adjusting for inflation, according to TransUnion's internal records.
What are the negatives of Gen Z? ›
Lack of financial literacy: Despite their technological prowess, many Gen Z employees may lack essential financial literacy skills, such as budgeting and investing, which can impact their ability to manage their finances effectively and plan for the future.
Why is Gen Z so wealthy? ›
While millennials entered adulthood during a financial crisis, Gen Z came of age during an economic boom. The majority of American Gen Z have strong credit scores and less school debt than previous generations. They're ready and able to deploy capital at unprecedentedly young ages.
Why are millennials so rich? ›
There may be another factor creating so much wealth among millennials: inheritances. In what's known as “the great wealth transfer,” baby boomers are expected to pass down between $70 trillion and $90 trillion in wealth over the next 20 years. Much of that is expected to go to their millennial children.
Who will be the richest generation? ›
A vast $90 trillion wealth transfer over the next 20 years will likely make millennials “the richest generation in history,” according to consultancy Knight Frank. “The millennials are very ill prepared [to handle this wealth],” said family wealth management expert Salvatore Buscemi.
Why is life so hard for Gen Z? ›
She says Gen Z faces more challenges in some ways than previous generations. “There's a growth in inequality in the transition to adulthood. There's a lot of changes in culture and norms, insecurity more generally, in terms of climate change and the war and school shootings and rapid inflation.
Gen Z is making less than millennials made a decade ago at the same age. As of the fourth quarter of 2023, Gen Zs aged 22 to 24 were making an average of $45,493. At that same age 10 years ago, adjusted for inflation, millennials were making $51,825, according to a recent study by TransUnion.
Who does Gen Z trust the most? ›
TikTok, Snapchat and Spotify top a list of brands Gen Z consumers trust most compared to all U.S. adults, according to a new report from decision intelligence company Morning Consult.
What is the average amount of credit card debt that millennials have? ›
Average credit card debt by generation
| Generation | Average Credit Card Balance March '22 | Average Credit Card Balance Feb '24 |
|---|
| Baby Boomer | $5,700 | $6,800 |
| Gen X | $6,400 | $8,900 |
| Millennial | $4,500 | $6,700 |
| Gen Z | $2,000 | $3,300 |
1 more rowMar 1, 2024
But one generation carries the most, on average: Gen X. The average credit card balance for Gen Xers, defined at those between the ages of 43 and 58, rose to $9,123 in the third quarter of 2023, according to Experian's latest available data. That marks the highest average credit card balance of any generational cohort.
Who uses credit cards the most? ›
According to survey data from the World Bank – which stems from 2021, due to a three-year survey released in the summer of 2022 – Canada, Israel, and Iceland were the only countries with credit card ownership higher than 74 percent.
Who are the unhealthiest generation? ›
The report found that millennials had substantially higher diagnoses for eight of the top 10 health conditions than Generation X, and based on their current health status, millennials are more likely to be less healthy when they're older, compared to Gen Xers.
Does Gen Z have it harder than other generations? ›
Gen Zers are having a harder time making ends meet, let alone building wealth. Roughly 38% of Generation Z adults and millennials believe they face more difficulty feeling financially secure than their parents did at the same age, largely due to the economy, according to a recent Bankrate report.
Which generation suffers the most? ›
By the numbers: Gen Z — people roughly between the ages of 12 and 27 —reports the poorest mental health of any generation, according to a recent Gallup and Walton Family Foundation report. Just 44% of Gen Zers say they feel prepared for the future.
What is the difference between Gen Z and millennials personality? ›
Millennials, born roughly between the early 1980s and mid-1990s, exhibit a penchant for authenticity, social consciousness, and experiences. In contrast, Generation Z, born from the mid-1990s to the early 2010s, values individuality, digital fluency, and instant connectivity.
