According to a new Bank of America survey, nearly half of Gen Zers ages 12 to 27 rely on some form of financial support from their families. Shanna Stevens, senior vice president of community banking at Bank of America, appears on Wealth! to discuss how Gen Z is managing their personal finances.
“They’re feeling the pressure of the rising cost of living, and being young and early in their careers, it’s a huge burden,” Stevens explains. But he notes that about 82% of Gen Z have financial goals and are severely restricting their spending to reach those goals. He points to “out loud budgeting” as a positive social media trend that Gen Z is following.
“Not only are they turning down social activities and opportunities they can’t afford, but about 38 percent said they feel comfortable not only saying no but also admitting they can’t afford the cost.”
Stevens noted how transparency is important as Gen Z struggles to save money in the current economy. He noted that many in Gen Z aren’t ready to buy a home, save for retirement, or even start investing. With these milestones lagging behind their parents’ generation, Stevens stresses the importance of saving early and often.
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This post was written by Melanie Leal
Video Transcript
Gen Z is struggling financially.
Gen Z, don’t take aim at me, according to a new Bank of America survey.
To dig deeper into the survey, we find that almost half of Gen Zers rely on some sort of financial support from their family.
Joining us today is Shauna Stevens, senior vice president of community banking at Bank of America.
Thank you for appearing on our show.
got it.
Let’s take a closer look at some of this data. Gen Z can also be divided into groups, with the top half of Gen Z having just entered the workforce and the bottom half still in middle school or early high school.
This means that they are still dependent on their parents.
But what are we seeing in terms of the fundamentals of how these financial structures are starting to take shape in this generation?
That’s a great question.
Thank you so much for inviting Gen Z to be part of our study. We started with age 18 and surveyed 18- to 27-year-olds in our study of Gen Z.
And what we were seeing was exactly what you just described.
They are really feeling the strain of the rising cost of living and being young and at the early stage of their careers it certainly puts a strain on them.
And when you think about how this generation compares to previous generations at this point, what do we know at this point?
What we are seeing is similar to some extent, but with the rising cost of living, we are facing headwinds that other generations have not had to face.
But we are seeing some things that give Gen Z so much more. We are very optimistic, and we are seeing behaviors in Gen Z that we haven’t seen in other generations.
interesting.
got it.
Let’s break down some of these behaviors because this generation has more access to technology and behaviors than previous generations, and more opportunities to connect with others through data, information, and entertainment.
So how can it be used to shape children’s own understanding and good money habits?
They truly take control of their finances into their own hands.
When it comes to Gen Z, around 82% of Gen Zers actually have financial goals.
So they have a financial roadmap that they actually follow.
Another characteristic of Gen Z, who have everything at their fingertips, is that they are making the right adjustments to cope with the high cost of living.
And the measures they’re taking are considering and declining dining out, hosting events with friends, and declining those too if they don’t have the money.
And when it comes to choosing where to buy groceries, they try to shop at more affordable grocery stores.
We talk about their access to social media and how in the past some of the trends on social media have been negative.
But what we are seeing, and what gives us great optimism, is the vigor with which budgets are being prepared.
So, not only are our Gen Z members turning down social activities and opportunities they can’t financially afford, but roughly 38% of them say they feel very comfortable not just turning down but admitting that they can’t afford the cost.
Yeah, their side is very transparent.
Yep, shameless transparency, yeah, and healthy too.
With that in mind, what will the trajectory be for peak earnings?
But right now, what we’re seeing is Gen Z saying they can’t save.
So when we think about planning for our peak years, there are traditional milestones that we tend to achieve, like buying a home or saving for retirement, but a survey of Gen Z found that roughly 50% have no plans to buy a home in the next five years.
Additionally, about 46% of people said they are not actively saving for retirement.
And a further 40% of respondents said they have no plans to start investing in the next five years.
So when these traditional milestones are delayed, it’s a bit worrying.
But the key thing Gen Z needs to understand is the importance of budgeting and starting to save frequently, says Shanna Stevens, senior vice president of Bank of America Community Banking.
Thank you for appearing on our show.
Thank you for breaking down some of these findings.
Thank you for calling.
