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Gen Z: Economic State Making it Harder to Save

Like most Americans, Gen Z is looking to establish their financial footing amid record-high mortgage rates and nationwide inflation, as the economic environment poses new challenges in achieving their financial goals. This is according to new research published 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, new research also examines ways in which race, ethnicity, and gender may influence their financial priorities and challenges.

According to an estimated 73% of Gen Z, the current economic environment has made it more challenging to save. They reported feeling that inflation has made it harder to save for financial goals (59%) and paying down debt (43%) has created more financial stress (56%) within their lives.

Some 40% also said 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.

Currently, 75% of Gen Z are taking or considering steps to earn additional income including:

  • Changing jobs (34%)
  • Turning a passion into a source of income (31%)
  • Taking on a second job (26%)
  • Taking on a job they don’t like (23%)

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.

"Gen Z is ambitious and enterprising, and taking positive actions as they join the workforce and make some of their first financial and career-driven decisions," said Christine Channels, Head of Community Banking and Consumer Governance at Bank of America. "Current economic and inflationary headwinds have created added challenges for many. Through our Better Money Habits platform, we're connecting these young adults to a wide range of resources and guidance designed to give them the skills, knowledge, and confidence to succeed financially.”


  • Gen Z’s top three priorities for the year ahead include furthering their education (40%), advancing their career/salary (32%) and getting a new job (31%). These priorities are followed closely by saving for retirement (25%), traveling (24%), buying a car (22%) and building good credit (20%).
  • Gen Z is more likely than other generations to cite the desire to comfortably afford material items (45%) as a motivator to achieving financial success (vs. 34% of Millennials, 30% of Gen X, 30% of Boomers).
  • More than half (56%) of Gen Z say discipline is a key trait to achieving financial success, with other important traits and characteristics being financial savvy (37%), organization (35%), motivation (34%), self-awareness (29%), frugality (20%) and confidence (20%).
  • Today, two-thirds (66%) are actively saving for financial goals and, despite the current environment, 58% are optimistic about their financial futures.

Much of Gen Z has the financial basics down, though they struggle with more complex topics such as investing and debt.

  • Gen Z feels equipped to handle basic financial tasks, including budgeting (71%), managing day-to-day expenses (70%) and building/managing credit (65%). However, preparedness levels decrease significantly when it comes to the future and more complex topics, including building an emergency fund (54%), saving for retirement (43%) and investing (29%).
  • Nearly 40% have no investments and of those the top reasons for not investing include having no additional funds to spare (44%), not knowing where to start (31%) and feeling investing is too risky (23%).

Federal student loan freeze has brought some relief.

  • Nearly half (47%) of Gen Z already carries some form of debt, including through credit cards and student loans.
  • They have found that the federal student loan freeze has brought them some relief. Among those with student loans, 41% say the freeze allowed them to maintain their current standard of living, 23% say it allowed them to contribute more to their savings, and 21% say they’ve been able to continue paying down their loan without collecting interest.

Demographic Spotlights

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.

  • 60% of Black/African American Gen Z identify as mostly or fully financially independent – more so than their non-Black/African American peers (45%).
  • 80% are currently/considering taking routes to earn supplemental income – more so than their non-Black/African American peers – including taking on a second job (35% vs. 25%).
  • They are 3x as likely to prioritize starting or growing a business in the year ahead compared to non-Black/African American Gen Z (15% vs. 5%).
  • Black/African American Gen Z is nearly twice as likely to say they currently invest or are considering investing in cryptocurrencies than non-Black/African American Gen Z (22% vs. 12%).
  • While Black/African American Gen Z is more likely to have debt than their counterparts (60% vs. 44%), this is down from 70% year-over-year.
  • This community is more likely to cite taking on too much student loan and/or credit card debt as their biggest financial regret (30% vs. 17%).
  • 40% contributed to their savings over the last year (vs. 56% of non-Black/African American Gen Z), however two-thirds (67%) don’t have enough emergency savings to cover three months of expenses – with one-third (32%) of all Black/African American Gen Z citing not having an emergency fund as their biggest financial regret.

Gen Z women’s financial literacy gaps and lack of investing, relative to men, may negatively impact their near and long-term financial wellness.

  • Gen Z women and men feel equally equipped to build/maintain credit (64% vs. 66%) and stick to a budget (69% vs. 73%).
  • However, Gen Z women feel less equipped to manage day-to-day expenses (63% vs. 76%) and to build an emergency fund (48% vs. 61%). Just 38% of Gen Z women have enough emergency savings to last three months, compared to 48% of Gen Z men.
  • In terms of longer-term planning and investing, Gen Z women’s financial knowledge has them feeling less equipped than Gen Z men to save for retirement (37% vs. 49%) and to invest (22% vs. 35%).
  • Today, 41% of Gen Z women have not yet begun investing, compared to 34% of men, and are less likely to even be considering individual investments (36% vs. 47%) or retirement savings vehicles such as a 401(k) (39% vs. 46%).

“We recognize the unique financial needs across diverse and historically underserved communities,” said Channels. "The insights from this annual research help to inform how we tailor resources and guidance to empower the next generation as they embark on their financial journeys. Last year, for instance, we developed a Gen Z financial guide based on insights into the priorities, preferences and challenges of this growing client segment.”

To read the full report, including more data and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].

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