Life is more expensive than many young people expected.ViewApart / Getty Images
Some young people are being priced out of the lives they imagined for themselves.
Gen Zers are racking up debt and struggling to afford buying a home or having kids.
There are still steps young people can take to help achieve their dreams, says an Experian executive.
Young people are being priced out of the lives they pictured for themselves. Many Gen Zers, born between 1997 and 2012, are racking up debt and fear “adult” milestones such as becoming homeowners and having children are out of reach.
“Generation Z is deeply concerned about the feasibility of achieving the lives they envision,” Jennifer Rubin, a senior researcher at education research group foundry10, told Business Insider.
“Rising costs of living, tuition fees, and an unstable job market have made milestones like homeownership, financial independence, and even career stability seem more out of reach than ever before.”
Gen Z has a debt problem.
As a group, they have roughly 30% more credit card debt than millennials did at their age even after inflation, TransUnion data shows. They’re also the most likely cohort to max out credit cards and become delinquent on payments, New York Fed data shows.
Alyssa Schaefer, the general manager and chief experience officer of Keybank-owned Laurel Road, a digital banking platform, said uncertainty about repaying student loan debt is “having long-term implications on young people’s financial milestones.”
She cited a survey commissioned by her firm in partnership with Luminary, a professional education and networking platform, and conducted by Kantar this past fall.
Of the 1,714 US adults with private or federal student loans surveyed, 79% said they struggled to save for emergencies or retirement, 75% said they couldn’t invest, 52% said they couldn’t afford to buy a home, and 35% said they were delaying having children. Most respondents were aged 25 to 44, while responses were collected from ages 18 to 65-plus.
Owning a home feels painfully out of reach for many young Americans.
Census data shows homeownership rates dropped from almost 44% in 2004 to 37% this past fall, and the percentage of adult children ages 25 to 34 still living at home climbed from under 11% in the early 2000s to 16% in 2023. That’s at least partly a function of home prices racing to record levels and mortgage rates surging to two-decade highs.
Enrique Martínez García, the international group head of the Dallas Fed’s research department, told BI that slower generational progress has “profound” social and economic consequences.
People taking longer to partner up and have kids can choke population and economic growth, he said. Those who can’t afford a home are missing out on a reliable wealth-building strategy that underpins overall demand in the economy.
Pricing out people also prevents them from moving across the country to where their labor is most valued. They may also have fewer or no children and slimmer retirement savings, Martínez García said.
Whether it’s paying for day care, building a college fund, splurging on family vacations, or simply covering the living expenses of a whole other person or multiple people, having children comes with plenty of costs attached.
“The young people we interviewed were definitely worried about whether they would be able to earn enough to have families,” Roberta Katz, a coauthor of “Gen Z Explained: The Art of Living in a Digital Age” and a senior research scholar at Stanford University, told BI.
A 2023 Pew Research Center survey of childless US adults under 50 found that among those who said they were unlikely to ever have kids, 36% said a major reason was they couldn’t afford to raise them.
It’s easier than ever to waste money when apps like Instagram and TikTok serve as virtual shopping malls, influencers urge their followers to emulate their lavish lifestyles, and digital payment services like Apple Pay and Afterpay make buying things quick and painless.
Keisha Blair, a personal finance guru and author, told BI the “convenience of digital payments and online transactions makes impulsive spending more accessible than ever” for Gen Z.
“Social media further amplifies this, exposing them to a constant stream of influencers and aspirational lifestyles, fostering a culture of instant gratification and heightened consumerism,” she added.
Blair said that Gen Zers who wind up in debt and fall behind on their payments could do harm to their credit scores. That could prevent them from obtaining financing for a car or home, and frustrate their efforts to build wealth and become financially independent, she said.
Laurel Road’s Schaefer told BI that Instagram ads are so precisely targeted at her that she often clicks through and buys an item. But when she fears she’s making an impulse purchase, she’ll leave the product in her cart for at least 24 hours to give her time to decide whether she really wants it.
Young people may feel like the odds are stacked against them, but they can still take “concrete steps to achieve their dreams,” Rod Griffin, Experian’s senior director of consumer education and advocacy, told BI.
He recommended taking control by drawing up and sticking to a budget, setting achievable goals, seeking professional guidance if needed, cutting back on impulse purchases, and eliminating “sneaky expenses” such as subscription fees.
Gen Zers can also disregard the goals of past generations and focus on fulfilling their own ones instead. Elizabeth Husserl, author of “The Power of Enough: Finding Joy in Your Relationship with Money,” told BI that achieving classic adult milestones isn’t always as rewarding as people expect.
Young people can be more intentional and prioritize “meaning, sufficiency, and fulfillment over relentless striving,” Husserl said. Once they’re clear about what truly matters to them, they might opt to co-live to cut their housing costs or pursue alternative education to avoid racking up debt, she said.
They can “redefine wealth on their own terms,” perhaps by buying a house with a friend, or eschewing the corporate grind in favor of side hustles that offer flexibility and align with their personal values, she added.
