Credit reporting agency TransUnion conducted a study comparing the financial challenges faced by Generation Z to those of millennials a decade ago. The findings revealed significant differences between the two groups, with Generation Z showing more caution towards debt but also grappling with higher living costs and a more uncertain job market.
The study analyzed 614 individuals from Generation Z aged 22-24 and compared their financial situations to 623 millennials in the same age group from ten years earlier. The results indicated that today’s young adults are dealing with a higher debt-to-income ratio and lower earnings (adjusted for inflation) compared to their counterparts from the past.
With rising living expenses and education costs, young people are facing increasing levels of student loan debt. Despite stagnant wages and escalating costs for necessities like food, rent, and healthcare, achieving financial stability has become more challenging for today’s youth. This underscores the necessity for holistic solutions aimed at narrowing the wealth gap and alleviating financial pressures on this demographic.
In 2023, individuals aged 22-24 had an average income of $45,493.
Comparing Financial Challenges: Generation Z vs Millennials
However, factoring in inflation, the same age group earned an average of $51,852 in 2013. The current debt-to-income ratio is 16.05%, higher than the 11.76% reported a decade ago, indicating a decline in financial well-being for this age bracket and emphasizing the importance of effective debt management and financial planning for young adults.
According to 2023 data, Generation Z individuals aged 22-24 carry an average credit card debt of $2,834, an increase from the $2,248 held by millennials in the same age group a decade ago. This rise in debt early in adulthood could potentially destabilize the long-term financial outlook for Generation Z.
The study also revealed that Generation Z experiences more financial stress than millennials, with 14% of Generation Z respondents feeling “extremely stressed” compared to 8% of millennials. Additionally, only 8% of Generation Z participants expressed “extreme confidence” in their financial future, while 13% of millennials had similar confidence levels a decade earlier. This disparity highlights the importance of policy actions to alleviate financial concerns and ensure future financial security for Generation Z.
