Today, 46% of Gen Zers (ages 18-27) rely on financial help from parents and family, according to new research from Bank of America America’s Better Money Habits® financial education team. In addition, 52% of those surveyed said they don’t make enough money to live the life they want and cite the cost of living as a top barrier to financial success. Many said they are delaying milestones and are not on track to buy a home (50%), save for retirement (46%), or start investing (40%) within the next five years – even though they are working toward those goals.

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To offset growing expenses, the study found that two-thirds (67%) are implementing lifestyle changes such as cutting back on dining out (43%), passing on events with friends (27%), and shopping at more affordable grocery stores (24%). A recent Bank of America Institute analysis further demonstrated these findings, noting Gen Z and Millennials are “trading down” to combat rising costs – this despite a strong labor market over the last few years.

Though faced with obstacles driven by the cost of living, younger Americans are showing discipline and foresight in their saving and spending patterns,” said Holly O’Neill, President of Retail Banking at Bank of America. “It is critical that we continue to empower Gen Z to work toward achieving financial health and meeting their long-term goals.”

Getting Support and Saying No

Despite their greater discipline, amidst today’s high cost of living, Gen Z remains financially dependent on others. Over half (54%) don’t pay for their own housing. Of those who do (46%), nearly two-thirds (64%) report spending over 30% of their monthly paycheck on housing, and two-in-10 report contributing over 51% of their monthly paycheck to housing.

The new Better Money Habits research found that “loud budgeting” – being vocal with friends about what social outings they can and cannot afford – has helped Gen Z live within their means. More than one-third (38%) feel comfortable declining social opportunities and admitting it is because they can’t afford the expense. Similarly, 63% do not feel pressured by friends to overspend, indicating that Gen Z may be drawing firmer financial boundaries compared to other generations at the same age.

Saving Struggles

Gen Z continue to struggle with building savings and contributing to their retirement.

  • Over half (57%) of respondents do not have enough emergency savings to cover three months of expenses.
  • Nearly one-third (30%) feel they don’t make enough money to save.
  • Only 15% of Gen Z put a set percentage of their paycheck into a savings account each month. Just 1 in 5 contribute to a 401(k) plan or retirement account.

Additional Insights from the Survey:

  • Most Gen Z respondents shared that they feel equipped to handle financial basics, such as managing their day-to-day expenses (70%), sticking to a budget (70%) and building/managing credit (66%).
  • The vast majority (82%) of Gen Z have financial goals, and over half (51%) are prioritizing them.
  • Gen Z continues to use their leftover income on experiential spending like dining out (36%), shopping (30%) and entertainment (24%) – higher than other generations.
  • 61% of Gen Z women said the high cost of living is a barrier to financial success, vs. 44% of men.

For more details, see the full report (PDF).