11 Reasons Why So Many Gen Z People Are Broke That Have Nothing To Do With Their Salaries
It may be tough for them to hear, but the real reason Gen Z is struggling financially has nothing to do with their paycheck.
CarlosBarquero / Shutterstock To hear them talk, more people in Gen Z are completely broke than you would think they would be. Whether it's because they can't find a job or their bosses refuse to pay them more, Gen Z can't seem to catch a break or develop financial security — but the reasons so many of them are broke have nothing to do with their salaries.
From cost of living to taking out too much debt, there are plenty of pressures weighing on Gen Z that are keeping them from becoming financially secure.
These are 11 reasons why so many Gen Z people are broke that have nothing to do with their salaries
1. They got caught up in student loan debt
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The first reason why so many Gen Z people are broke that has nothing to do with salaries is they get caught up in student loan debt. Now, to be clear: there's nothing wrong with getting an education. Spending thousands of dollars on a college education can be rewarding.
According to the Social Security Administration, men with bachelor's degrees earn a median of $900,000 more in their lifetime compared to high school graduates. Additionally, women earn $630,000. And that's not all. They found that men with graduate degrees earn 1.5 million more while women earn 1.1 million more. Showcasing just how crucial higher education is.
Even so, there are strategic ways to go about funding education that most 18-year-olds don't think of. For instance, going to community college first or going to trade school is one way people can cut costs. Additionally, applying for scholarships, going to public universities, and only taking out loans on tuition are other ways to keep student debt cost-effective.
That said, Gen Z shouldn't feel pressured to start college right away. Taking a year or two to try out internships and figure out what they truly like is a great way to also avoid getting caught up in student debt, at least, for a while.
2. They don't have a clear budget
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As brilliant as Gen Z is, there is a high need for schools to teach more about budgeting. Another reason why so many Gen Z people are broke that has nothing to do with their salaries is that they don't have a clear budget.
Understandably, budgeting everything is annoying. In an ideal world, people wouldn't have to budget for groceries or necessities and could buy whatever they like. Unfortunately, most people know that the luxury of not having to budget is long over. After all, eggs are more than a Netflix subscription.
That said, having a clear budget is great for multiple reasons. According to Northwestern University, a successful budget helps people identify their needs, and wants, controls wasteful spending, and helps people adapt easily as their financial situation changes.
Despite this fact, many Gen Zers struggle to budget because they were never taught how to. Besides adding up grocery prices, many Gen Zers were never taught how to properly use coupons, the best places to shop, or how to make easy meals with limited ingredients. As a result, their lack of knowledge in this department impacts them for the worst, draining their pockets within them even knowing that there's a better way.
3. They're not actively investing in themselves
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Once college is over, the time to invest in education is all but over. After all, Gen Z already spent a pretty penny getting their bachelor's or master's degree. Why invest more into themselves, right? Don't they deserve a break?
It's unfortunate, but colleges fail to teach Gen Z important life skills. Whether it's learning to invest, start businesses, or build their brand, colleges put less emphasis on financial literacy and more emphasis on other skills like research. And although knowing how to research, read, and write professional papers is important, what's even more important is learning how to make their money work for them.
That said, the Global Financial Literacy Excellence Center 2021 report found that only two-thirds of Gen Z could answer 50% or less of the index questions correctly. Knowing this, Gen Z should take the time to take those additional classes or read those 'boring books.' Remember: investing in yourself will only impact you for the better.
4. They don't have the best spending habits
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Hate to be stereotypical, but Gen Z isn't the most savvy spenders out there. Now, to be fair, there are some Gen Zers that are great at restraining themselves. However, a huge reason why so many Gen Z people are broke that has nothing to do with their salaries is that they don't have the best spending habits.
Let's face it: society has become reliant on unnecessary spending. Whether it's spending hundreds of dollars on skincare or shoes most Gen Z don't have the same restraint compared to the older generations.
That said, can society truly blame them? After all, they grew up vastly different than a lot of the older generations. And while the older generations grew up in simpler times the same can't be said about the younger generations. As a result, while Gen Zers certainly do their best to be price-conscious, research from Merge found that 85.8% admitted they exceeded their budget while attending events.
Despite this fact, Gen Z still has the opportunity to change their behavior. By actively choosing to put items on save later for a week they can figure out if what they are looking to buy is truly necessary.
5. They weren't taught how to invest
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How many people were taught how to invest? It's unfortunate, but a reason why so many Gen Z people are broke that has nothing to do with their salaries is because they weren't taught how to invest.
It's sad to see this, but many Gen Zers throw money into their retirement plan without knowing about other avenues such as Roth IRAs or worse, not investing their 401k money. As a result, it's all too common to see their money sit there without ever making their money work for themselves.
According to a report in 2023, there's only a certain percentage of Gen Z actively investing. For instance, they found that while only 20% of 18-19 year olds are investing, 45% of 20-22 year olds are investing. Still, as Gen Z reaches 23-25 years old the percentage of investors drops to 34%, leading to most of Gen Z not actively investing in themselves.
To avoid this, Gen Zers should take the time to educate themselves on their options before blindly 'investing' money. Otherwise, they could unintentionally be wasting their money as they allow years to go by with zero growth.
6. They actively deal with digital and social pressure
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The next reason why so many Gen Z people are broke that has nothing to do with their salaries is a result of dealing with digital and social pressure. Whether it's TikTok or Instagram, most Gen Zers can't escape the influencer lifestyle. For those who don't know, the influencer lifestyle is essentially the picture-perfect life.
Living in a relatively big house, these influencers advertise their perfect life by showcasing Stanley Cups, Dysons, expensive hair care products, and expensive cars. On the outside, this person appears to be living the perfect carefree life. Unfortunately, many people clamber for this life without fully realizing how unrealistic and sometimes, improbable their life truly is.
Knowing this, Gen Z should avoid self-comparison at all costs. Not only do Gen Zers not know what's going on behind closed doors, but the act of self-comparison can negatively impact them for the worse.
According to two studies published in the Journal of Adult Development, constant social comparison leads to feelings of guilt, envy, defensiveness, and regret. The second study found that it can also lead to a decrease in job satisfaction as well. So, if Gen Z truly wants to save money then stop being influenced to buy everything. Set a budget and stick to it.
7. They have to deal with a high cost of living
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Not everything is Gen Z's fault and a huge reason why so many Gen Z people are broke that has nothing to do with their salaries often stems from the high cost of living. Right now in places like New Jersey, it's not uncommon for people to pay $1,700 for a one-bedroom apartment in a decent neighborhood. This is ridiculous as that money spent is most likely someone's mortgage in the South.
According to J.P. Morgan Research, house prices are expected to increase 3% in 2025. However, that's not the only thing that's gotten more expensive. It should go without saying that egg prices are through the roof.
What started out as paying a few dollars, has now turned into paying almost $30 in some states. Understandably, these prices have dramatically impacted Gen Z's ability to save, causing them to stay broke.
8. They prioritize experiences over savings
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There's nothing wrong with using money for experiences. Unlike a certain billionaire's mother who proudly claimed that people don't need to go to the movies, normal people understand that experiences are priceless.
According to a study published in the Journal of Experimental Social Psychology, people are increasingly more likely to be happy when they spend money on experiences versus materialistic possessions. That said, a reason why so many Gen Z people are broke that has nothing to do with their salaries is because they prioritize experience over savings.
While there's nothing wrong with going on vacation once a year or eating out, like anything in life, there's a need for balance. Only focusing on experiences while neglecting investing and savings will quickly lead to financial ruin in the future if people aren't careful.
So, to avoid this, be sure to have a savings folder as well as an experience folder. That way, Gen Zers are being responsible while also investing in the things that make them happy.
9. They face barriers to entrepreneurship
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If someone were to ask Gen Z what they're looking for in a job most of them would likely respond with flexibility. Not wanting to spend all day stuck in an office Gen Z wants to go out there and create small businesses. Unfortunately, one reason why so many Gen Z people are broke that has nothing to do with their salaries is that they face barriers to entrepreneurship.
Don't get it twisted: Gen Z is absolutely out there and actively doing their best to create small businesses. Quitting their regular job this generation has no issue working hard to accomplish their dreams.
That said, working hard is utterly useless if there's zero guidance on what they should do. As a result, many Gen Zers who start businesses quickly find themselves at a loss as they navigate the tricky world of taxes and advertising. All of this combined causes Gen Z to either run their money dry while starting a business or look for another job that can steadily pay the bills.
10. They aren't educated on life skills
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As talented as Gen Z is there's a clear difference between the older generations and Gen Z. While boomers and Gen Xers were taught how to change a tire or fix a leaking sink, many of the younger generations don't even know what a full synthetic oil change or a high mileage oil change is. As a result, a reason why so many Gen Z people are broke that has nothing to do with their salaries boils down to their lack of life skills.
Now, not learning these life skills isn't their fault. If parents or grandparents don't step in to teach them then how can people honestly expect them to suddenly know how to sew a broken button or cook dinner?
Even so, it's never too late for Gen Z to actively learn how to do these essential life skills. In the age of modern technology, there are plenty of videos on TikTok or YouTube that can teach people how to do multiple different life skills.
Granted, not everybody learns better this way, still, asking around, taking a class, or looking it up is a lot better than continuing to not be educated. Like it or not, educating oneself on how to fix their car or heater is the quickest way to save money.
11. They rely too much on subscription-based services
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Finally, the last reason why so many Gen Z people are broke that have nothing to do with their salaries is because they rely too much on subscription-based services.
Now, understandably, Gen Z is busy. With the cost of living continuing to increase most Gen Z have to put in overtime just to make ends meet. Unfortunately, with this amount of stress comes the need for convenience. After all, if someone is working every day it's only natural that they'll need to rely on fast-paced services like Doordash. Even so, these subscription-based services can quickly eat up their paycheck, unintentionally making them broke.
That said, what can Gen Z do? Besides canceling those services, Gen Z should focus on balancing convenience and money. For instance, instead of depending on Doordash so heavily, they should try cutting it down to two times a week.
Additionally, doing pickup instead of getting groceries delivered is another way they can cut costs while not compromising so heavily on their time. Is this always ideal? No, however, whether people like it or not these are better and more effective ways to save.
Marielisa Reyes is a writer with a bachelor's degree in psychology who covers self-help, relationships, career, family, and astrology topics.