11 Honest Reasons Gen Z Has Become The Poorest Generation
Despite accusations of laziness and entitlement, there are valid reasons for Gen Z's collective financial struggle.
Starocean | Shutterstock.com According to data from the U.S. Census Bureau, Gen Z has become the poorest generation, harboring the most individuals and households living in poverty amid rising costs, inflationary pressures, and an unstable economy. While people in older generations may blame Gen Z for their own financial misfortune, arguing that they’re lazy and unmotivated, there are actually several honest reasons Gen Z has become the poorest generation that have nothing to do with their character.
By acknowledging the very real pressures that contribute to poverty in the United States, including among Gen Z, we not only tear away at the stigma of struggling communities, we start to lead with empathy in important and empowering ways.
Here are 11 honest reasons Gen Z has become the poorest generation
1. They’re not getting married early
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While over half of Gen Z respondents in The Knot’s 2023 survey suggested they were open to getting married in the future, many of them are too busy promoting their own individualism and personal growth — from an education, to careers, to finding comfort in being single — to consider finding a life partner at this stage in their lives.
With a host of societal stereotypes to fuel Gen Z’s individualism and embrace of a single lifestyle, it’s easy to overlook the subtle financial struggles that may envelop a generation waiting to get married.
Without living in a double-income household to leveraging the tax benefits of marriage, Gen Z aren’t able to make the big investments or save money to the same degree that a married couple may, despite living in similar areas, purchasing the same necessities, and planning for the same futures.
2. They have more student debt
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With rising costs of higher education and less economic stability for post-graduate students, many younger generations like Gen Z are struggling to pay their student loans. According to a National Way of the National Capital Area study, nearly 70% of Gen Zers are concerned with inflationary pricing, with 64% worried about finding affordable housing.
Coupled with rising rates of poverty in Gen Z, job instability, and rising costs, many are falling behind under the weight of their student loans — unable to secure affordable housing and a stable, well paying job after graduating college.
For some, this means living at home longer, according to Pew Research Center surveys, to afford their loan payments and basic necessities, but for those without family to rely on, they’re simply surviving — with some refusing to pay their loans at all.
3. Owning a home has become too expensive
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According to Arbor Realty Trust, Gen Z is the first generation to be almost exclusively renters, unable to save enough money to afford a down payment or invest in a home. While some financial experts suggest there are ways to save money while renting, the majority of Gen Z are spending far too much money — nearly 30% of their income on average — on rent every month to be able to do so.
With rising rent costs, especially in urban areas — where most post-graduate jobs are available in major industries — and inflationary pressures on utilities like electricity, necessities like groceries, and gas, Gen Z is balancing many more financial responsibilities, alongside more burdening loan payments, right after graduating college.
Even those who skip college are struggling to learn financial literacy immediately to stay afloat and reduce the risk of becoming dependent on a credit line, despite not being taught in their formal classrooms, and in many cases, by their parents how to be financially competent.
4. Higher education isn’t ensuring them a job
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Despite being promised the same traditional path of success that generations like Gen X and baby boomers experienced — where you go to college, secure a livable wage after graduating, and save money for larger investments — Gen Z has struggled to realize the comfort of their promised dream.
Whether it’s the competitive job market, expectations for work experience, rising costs of living, or a stigmatized view of Gen Z in the workplace, many have struggled to find a job that not only provides them upward mobility and job security, but a salary that pays their basic necessities and loan payments.
Coupled with money stress and the tendency to take on credit card debt, this insecurity is encouraging Gen Zers — even those with one or multiple degrees — to fall behind compared to their older counterparts at the same stage in their lives, not because they’re not motivated to succeed, but because they’re often not given the opportunity to find their footing.
5. Technology and AI are decreasing job opportunities
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Especially for Gen Zers who went to school to work in the data science, website development, or content creation fields, the impact of technology and AI services has sparked a great deal of job insecurity and change. Not only are these new technologies pushing many current employees to specialize and continue with more education, studies like one from the McKinsey Global Institute estimate that by 2030, up to 375 million workers will need to switch careers or industries because of AI automation.
Already feeling the pressure of needing extensive experience and connections to land an entry-level job, Gen Z is even struggling to find a bridge job working in retail or the food industry to pay their bills, still suffering with the burdens of competition, stigma, and the rise of e-commerce options compared to small business shops.
6. They’re struggling with credit card debt
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According to Credit Karma surveys, Gen Z is acquiring debt at a much faster rate than other generations, impacted by post-pandemic economic conditions and an insecure job market. Alongside their burdening student loans and other rising costs, the burden of debt Gen Z faces while trying to solidify their future lives and financial comfort, is not just overwhelming, but almost impossible to navigate for people without financial literacy education.
Coupled with their inability to find community in traditional “third spaces,” many young people are left seeking out social connection by spending — going out to dinner, dates, and visiting friends in an economy riddled with inflation and rising costs.
7. They don’t have emergency savings
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According to a Bank of America survey, nearly 60% of Gen Zers don’t have emergency savings to cover the recommended three months of expenses, while another 30% worry they don’t make enough money to save for anything, from retirement, to emergency expenses like healthcare, or investments.
With only one in five Gen Zers contributing money to a retirement account, the insecurity of their financial futures is often defined by their current struggles. Not only are they struggling to find a well-paying job that supports planning for their future, they’re unable to find one that funds their current situation — paying for rent, student loans, credit card debt, social connection, and basic necessities like groceries.
8. They’re battling lay-offs
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According to EY’s 2023 Gen Z Segmentation Study, the current economy and job market are two of the biggest stressors for Gen Zers, as they’re incredibly uncertain and increasingly exclusive. Considering the massive lay-off waves that’ve been popping up in recent years, young workers are feeling more distrusting and secure with their employers than ever before, forced to take on the inevitable stress of their job security, while balancing other financial struggles.
Especially without emergency savings to fall back on, lay-offs in major industries that Gen Zers primarily work in, from publishing to marketing and technology, leave young workers to rely on credit to survive once losing a job.
In this tumultuous job market that often fails to help workers secure a job immediately after losing another, many are forced to rely on competitive bridge jobs and connections to secure an income — adding a great deal of uncertainty, uncomfortable emotions, and shame to the lives of already struggling workers.
9. They’re spending more on experiences
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With the pressures of social media influencing Gen Z into perfectionism, where they feel anxious about living their life to the fullest, taking advantage of their time and youth, and maintaining a fully balanced life, despite financial insecurity, many are falling into the consumerist trap of society — spending more leftover income on experiences like dining out, going on vacation, shopping, and entertainment.
A Bank of America study revealed that many Gen Zers are using leftover income on experiential spending, rather than saving it or investing it elsewhere. While it might seem like an irresponsible venture to the outward eye, for many, it’s a way of promoting their own mental health with social connection or reaching towards perfectionist societal standards that urge them to work hard, play hard, and say “yes” to everything.
10. They struggle with financial literacy
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Without education from formal classrooms or their parents to guide them into financial comfort and stability later in life, many Gen Zers are struggling with taking on debt, contributing less money to savings accounts, and planning for their futures in the present moment.
According to a TIAA Institute study, there’s a significant gap in financial understanding between Gen Z and their older counterparts, illuminating a need for more financial education without stigma that promotes feelings of anxiety and shame in students.
11. They’re pressured by impulse consumerism
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With social media and e-commerce accessibility on popular platforms like TikTok, many Gen Zers are met with enhanced pressure to feed into their consumerist desires compared to older generations. From societal expectations upheld by influencers to being able to purchase things with a tap, it’s become easier for younger generations to separate themselves from the intentionality of buying something.
As a self-soothing tendency for many Gen Zers experiencing money anxiety, struggles with their mental health, and the consequences of a loneliness epidemic, impulse buying can feel like an easy short-term fix, sparking temporary feelings of joy in shoppers online.
Coupled with their collective desire to find belonging and acceptance, impulse shoppers can quickly take on more money stress and debt by feeding into these expenses — coping with the discomfort and insecurity of life by adding more pressure to their financial future.
Zayda Slabbekoorn is a staff writer with a bachelor’s degree in social relations & policy and gender studies who focuses on psychology, relationships, self-help, and human interest stories.