Credit reporting agency TransUnion undertook a study to assess the financial struggles confronting Generation Z compared to millennials of the same age one decade prior. Several interesting findings came to light, indicating significant variance between these two groups. Most notably, while Generation Z seems more debt-wary, they also deal with increased living costs and a more uncertain job market.
The analysis included 614 Generation Z consumers aged 22-24 and contrasted their experiences with those of 623 millennials of the same age group from ten years ago. The data indicated that the 22-24-year-olds in 2023 coped with a higher debt-to-income ratio and lower earnings (after accounting for inflation) compared to their millennial counterparts.
Today’s high living and education costs make young individuals more likely to bear student loan debt. Despite stagnant wages against escalating expenses like food, rent, and healthcare, achieving financial stability is becoming increasingly difficult for today’s youth. This prompts the need for comprehensive solutions aimed at bridging the wealth gap and lessening the financial strains on this population segment.
In 2023, those aged 22-24 earned an average income of $45,493.
Financial challenges: Generation Z vs millennials
However, after adjusting for inflation, the same age bracket earned an average of $51,852 in 2013. The current debt-to-income ratio stands at 16.05%, compared to just 11.76% 10 years ago. This foreshadows a deterioration in financial health for this age group over the past decade and highlights the growing importance of debt management and financial planning for young adults.
According to 2023 data, Generation Z, aged 22-24, holds an average credit card balance of $2,834, up from $2,248 for millennials of the same age ten years ago. This increase in debt, especially in the early stages of adult life, could potentially destabilize Generation Z’s long-term financial footing.
The data also showed that Generation Z experiences more finance-related stress than millennials. Of the Generation Z respondents, 14% indicated feeling “extremely stressed”, compared to 8% of millennials, additionally, only 8% of Generation Z respondents had “extreme confidence” about their financial future compared to 13% of millennials a decade prior. This discrepancy underscores the need for policy intervention to assuage these financial fears and ensure future financial stability among Generation Z.
