Even though the American Dream is not dead, achieving it has become more complex. In the past, one breadwinner could support a family of four in a house purchased and paid for by the family. In this article, FreedomDebtAssociates.com compiles ten money issues affecting young people
Gen Z isn’t living the best life financially, so what’s stopping them?
1. College has never been more expensive
After high school, there are many money issues affecting young people. However, tuition has been rising steadily, making this option less feasible for some people. There are other paths to take after high school, and it is essential to weigh all your options before making a decision.
As a result, some young people cannot attend college, resulting in poorer financial outcomes since bachelor’s degrees are essential for economic mobility.
2. Student loan payments eat up income
Increasingly, students are taking out student loans to finance their education due to the high cost of college.
As a result of this reality, the average college graduate has over $17,000 in debt, which must, of course, be repaid. These funds could have been used to pay for other expenses, such as housing.
Additionally, there is the added pressure to attend graduate school, which can result in a debt load of an additional $30,000.
3. The job market presents many challenges
As the labor market tightens, FreedomDebtAssociates.com shares that many sectors struggle to find qualified workers. Unfortunately, this includes new college graduates who have difficulty finding well-paying jobs in their field. Over 40% of them work in positions that don’t require a bachelor’s degree.
As a result, these Gen Zers are making less money than they should, which could have a lasting effect on their financial well-being.
4. Rents have increased
In recent years, the rent has become particularly expensive, which has always been a complaint of mine. Over 70% of renters experienced an increase of 14% in their monthly rent between 2021 and 2022. In some markets, it increased by as much as 25%.
Four out of 10 renters already spend nearly a third of their income on rent, so you can see how this can devastate their finances.
5. Buying a home is more expensive
The situation for Gen Zers looking to buy a home is not much better than that of their renting counterparts. As a result of the COVID-19 pandemic, housing costs rose significantly when remote work disrupted the market. Supply chain disruptions and material shortages compounded this.
In addition, mortgage interest rates are near 7%, making homeownership appear out of reach.
6. Inflation is soaring
It is not necessary to be an economist to notice that inflation is soaring, resulting in high prices for everything – groceries, gas, food, and durable goods. Even though price increases have leveled off, inflation remains higher than it has been for decades.
In addition to the difficulty of finding a job and the high cost of housing, Gen Zers face an additional financial burden. The mortgage above rates is also affected by inflation.
7. Saving for retirement is more expensive
Young people will need to save more money for retirement due to inflation in the long run. In the last 20 years, a dollar has not bought as much as it did.
Additionally, it’s likely to get worse over time. Today’s million dollars will be worth more than $300,000 in 40 years.
Furthermore, young people save only about 5% of their income, which is not enough to retire on time.
8. COVID-19 has depleted savings
The COVID-19 pandemic has impacted almost everything on this list. Furthermore, over 50% of Gen Zers are experiencing a decline in their emergency funds.
This situation puts young people in a vulnerable position in an emergency, which can happen at any time, as it did in March 2020 when the pandemic struck.
9. Financial literacy is widely lacking
Financial literacy has been included in the curriculum of some schools, but not all. Therefore, many young people may find it challenging to manage their finances effectively.
It includes understanding when to pay bills, investing, saving enough money, and learning strategies for crushing debt.
With all that Gen Zers face financially, financial illiteracy can easily make a difficult situation even worse.
10. Social Security isn’t a sure thing
As Americans live longer and the population ages, the Social Security system is under greater strain. Unless the government takes action to bolster the program, nothing may be left for future generations. This problem won’t impact young people for several decades, but they may not be able to count on collecting Social Security benefits when they retire.
Consequently, Gen Zers are under pressure to save even more for retirement, a task that has already become increasingly challenging due to inflation.
In summary
It has become more difficult for young people to navigate their financial future and present than ever before. Several factors contribute to this, including the high cost of seemingly everything, COVID-19 and its consequences, and a difficult job market.
Fortunately, there is still some good news, FreedomDebtAssociates.com says, as this generation is finding clever ways to boost their bank accounts and prioritizing homeownership despite the difficulties.
Because of their scrappy and savvy nature, they may turn out to be okay in the end.
Even though the American Dream is not dead, achieving it has become more complex. In the past, one breadwinner could support a family of four in a house purchased and paid for by the family.
Young people are instead seeking ways to reduce the financial stress their predecessors did not have to deal with – from housing to education.
Gen Z isn’t living the best life financially, so what’s stopping them?
