75% of Gen Z seeking ways to earn additional income
As Gen Z looks to establish their financial footing, the economic environment and inflation have posed new challenges in achieving their financial goals. This is according to new research published today by Bank of America’s Better Money Habits exploring this generation’s (ages 18 to 25) distinct approach to money – including their financial priorities, behaviors and challenges. With Gen Z being far more diverse than previous generations, the new research also examines ways in which race, ethnicity and gender may influence their financial priorities and challenges.
According to 73% of Gen Z, the current economic environment has made it more challenging to save. They feel inflation has made it harder to save for financial goals (59%) and pay down debt (43%) and has created more financial stress (56%) in their lives. Forty percent also say surging rents or home prices have made it challenging to afford day-to-day necessities. According to The Bank of America Institute, younger consumers are getting squeezed the most by higher rent inflation, with median rent payments up 16% year over year in July for Gen Z, compared to just 3% for Baby Boomers.
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Gen Z isn’t taking inflation and the higher cost of living sitting down. Currently, 75% of Gen Z are taking or considering steps to earn additional income including: changing jobs (34%), turning a passion into a source of income (31%), taking on a second job (26%) or even a job they don’t like (23%).
“Gen Z is ambitious and enterprising, and taking positive actions as they join the workforce and make some of their first financial and career-driven decisions,” said Christine Channels, Head of Community Banking and Consumer Governance at Bank of America. “Current economic and inflationary headwinds have created added challenges for many. Through our Better Money Habits platform, we’re connecting these young adults to a wide range of resources and guidance designed to give them the skills, knowledge and confidence to succeed financially.”
Other key findings from the Better Money Habits research include:
When it comes to success at work and in life, Gen Z is driven by the desire to achieve financial peace of mind (74%) and to comfortably afford the things they want.
• Gen Z’s top three priorities for the year ahead include furthering their education (40%), advancing their career/salary (32%) and getting a new job (31%). These priorities are followed closely by saving for retirement (25%), traveling (24%), buying a car (22%) and building good credit (20%).
• They’re more likely than other generations to cite the desire to comfortably afford material items (45%) as a motivator to achieving financial success (vs. 34% of Millennials, 30% of Gen X, 30% of Boomers).
• More than half (56%) of Gen Z say discipline is a key trait to achieving financial success, with other important traits and characteristics being financial savvy (37%), organization (35%), motivation (34%), self-awareness (29%), frugality (20%) and confidence (20%).
• Today, two-thirds (66%) are actively saving for financial goals and, despite the current environment, 58% are optimistic about their financial futures.
Much of Gen Z has the financial basics down, though struggle with more complex topics such as investing and debt.
• Gen Z feels equipped to handle basic financial tasks, including budgeting (71%), managing day-to-day expenses (70%) and building/managing credit (65%). However, preparedness levels decrease significantly when it comes to the future and more complex topics, including building an emergency fund (54%), saving for retirement (43%) and investing (29%).
• Nearly 40% have no investments and of those the top reasons for not investing include having no additional funds to spare (44%), not knowing where to start (31%) and feeling investing is too risky (23%).
Federal student loan freeze brings some relief.
• Nearly half (47%) of Gen Z already carries some form of debt, including through credit cards and student loans.
• They have found that the federal student loan freeze has brought them some relief. Among those with student loans, 41% say the freeze allowed them to maintain their current standard of living, 23% say it allowed them to contribute more to their savings, and 21% say they’ve been able to continue paying down their loan without collecting interest.
When dating, Gen Z would rather talk religion and politics than about their money.
• Growing up, 35% of Gen Z reported having open discussions with parents or guardians about financial topics – more so than Millennials (26%), Gen X (23%) or Boomers (21%).
• Despite greater dialogue about money at a young age, Gen Z still view money talk as a more taboo topic of discussion early in romantic relationships. During the first six months of a new relationship, they feel more comfortable discussing religion (81%), politics (75%) and previous relationships (71%) than they do their income (69%) and debt (60%).
• Many also feel more comfortable meeting their partner’s family (80%) and saying “I love you” (73%) within the first six months than they do talking about money.