73% of Gen Z Say Economic Environment Has Made it More Challenging to Save; 75% Seeking Ways to Earn Additional Income
Bank of America Better Money Habits Research Explores the Financial Motivations and Barriers Among Diverse Young Adults
As Gen Z looks to establish their financial footing, the economic environment and inflation have posed new challenges in achieving their financial goals. This is according to new research published today by Bank of America’s Better Money Habits exploring this generation’s (ages 18 to 25) distinct approach to money – including their financial priorities, behaviors and challenges. With Gen Z being far more diverse than previous generations, the new research also examines ways in which race, ethnicity and gender may influence their financial priorities and challenges.
According to 73% of Gen Z, the current economic environment has made it more challenging to save. They feel inflation has made it harder to save for financial goals (59%) and pay down debt (43%) and has created more financial stress (56%) in their lives. Forty percent also say surging rents or home prices have made it challenging to afford day-to-day necessities. According to The Bank of America Institute, younger consumers are getting squeezed the most by higher rent inflation, with median rent payments up 16% year over year in July for Gen Z, compared to just 3% for Baby Boomers.
Other key findings from the Better Money Habits research include:
When it comes to success at work and in life, Gen Z is driven by the desire to achieve financial peace of mind (74%) and to comfortably afford the things they want.
Much of Gen Z has the financial basics down, though struggle with more complex topics such as investing and debt.
Federal student loan freeze brings some relief.
When dating, Gen Z would rather talk religion and politics than about their money.
The research also explored how race and gender may influence financial priorities and challenges, including the racial wealth gap. Reflecting on the last five years, about two-in-five Black/African American (41%) and Hispanic (42%) Gen Z say some or significant progress has been made to close the racial wealth gap, while others in these groups say no progress has been made (both 30%). Looking to the next five years, about half of Black/African American (47%) and Hispanic (54%) Gen Z believe some or significant progress will be made to close the gap, while others say no progress will be made (28% and 24%, respectively). Additional findings include:
Black/African American Gen Z is paving the way toward financial independence and embracing a hustle culture, though barriers persist around debt and saving.
Family is at the cornerstone of Hispanic Gen Z’s financial lives; equate homeownership with financial success.
Gen Z women’s financial literacy gaps and lack of investing, relative to men, may negatively impact their near and long-term financial wellness.
The study was conducted June 24 – July 13, 2022, by Ipsos in both English and Spanish and is based on nationally representative probability samples of 1,098 general population adults (age 18 or older), and a partially overlapping sample of 921 Gen Z adults (age 18-25), including 124 Gen Z adults from a non-probability sample. This survey was conducted primarily using the Ipsos KnowledgePanel®, the largest and most well-established online probability-based panel that is representative of the adult US population. Panelists are scientifically recruited into this invitation-only panel via postal mailings to a random selection of residential addresses. To ensure that non-internet households are included, Ipsos provides access to a tablet and internet connection to those who need them. Because of this probability-based sampling approach, KnowledgePanel findings can be reported with a margin of sampling error and projected to the general population. The margin of sampling error for the general population sample is +/- 3.2 percentage points at the 95 percent confidence level.
Better Money Habits®
Bank of America
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