High living costs mean many young people turn to their parents as a safety net.
Nearly half, or 46%, of Gen Zers aged 18 to 27 rely on financial help from their families, according to a new report from Bank of America.
Additionally, 52% said they don’t earn enough to live the life they want, and that everyday expenses are the biggest obstacle to financial success.
“The rising cost of living is definitely impacting Gen Z,” said Holly O’Neill, president of retail banking at Bank of America.
The financial institution conducted the poll of more than 1,000 Gen Z adults in April and May.
Why times are tough for Gen Z
Many consumers are struggling with rising prices, especially for food, gasoline and housing. But those just starting out in life are facing even more financial hardship.
Not only are their inflation-adjusted wages lower than what their parents earned in their 20s and 30s, but they also have large student loan balances.
Other reports have found that compared to millennials, Gen Zers are spending significantly more on basics than people did a decade ago.
And they have the debt to prove it: The New York Fed reported in May that about 15% of Gen Zers are at risk of maxing out their credit cards and falling behind on payments, higher than any other generation.
“Delinquency rates indicate growing stress among segments of the population,” New York Fed researchers said at the time.
“The high cost of housing is definitely a barrier.”
Homeownership has become one of the most powerful levers of wealth creation since the coronavirus pandemic began, and people who have been priced out of the housing market have a disproportionately hard time achieving the same levels of financial security, according to Brett House, a professor of economics at Columbia Business School.
“This is a big challenge for Gen Z wealth accumulation,” he said.
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After food and groceries, housing is the expense many of today’s young people need help with, according to a Bank of America survey.
“The high cost of housing is definitely a barrier for them,” O’Neill said, “and we’re finding that the majority of Gen Zers don’t pay for their own housing.”
While experts recommend keeping housing costs to no more than 30% of your take-home pay, many young people who live on their own are spending much more: Two-thirds of those surveyed by Bank of America said they spend more than 30% of their salary on housing, and nearly a quarter said they spend more than 50%.
O’Neill said she advises her Gen Z children to follow the “50-30-20 rule,” which involves spending 50% of their pay on necessities like food, housing and transportation, 30% on discretionary spending and 20% to save.
Fewer Americans overall feel financially comfortable
But Gen Z isn’t the only one struggling: A separate Bankrate survey found that the majority of Americans believe they don’t make enough money these days to live the life they want.
Just 25% of adults surveyed said they were completely financially secure, down from 28% in 2023, according to the report.
In a Bankrate survey, respondents said they needed an average income of $186,000 to live comfortably, but needed to make just over $500,000 a year — an average of $520,000 — to feel wealthy.
Similarly, the recent spike in inflation and specific challenges around housing and college tuition costs pose major obstacles to achieving financial security, according to Bankrate.
“Many Americans feel caught between the ongoing shock of rising prices, a lack of income growth and a sense that their hopes and dreams are out of touch with their financial capabilities,” said Mark Hamrick, senior economic analyst at Bankrate.
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