1. Who Is Generation Z?
Generation Z, or Zoomers, are Americans born between 1997 and 2012. Many are now adults—working, paying bills, and dreaming of the future. But new data shows they’re struggling with managing money and carrying more debt than any other generation.
2. Poor Money Skills: Financial Illiteracy
A recent 2025 study from TIAA Institute and the Global Financial Literacy Excellence Center found that Gen Z averaged only 38% correct on basic financial literacy tests. That’s far below other generations.
Other reports echo this: only 25% of Gen Z say they feel very financially literate, compared to over 36% just two years ago. More alarmingly, 18% now say they feel “not at all” literate—double the rate of other generations.
Many Gen Zers say personal finance lessons came too late—or not at all. 75% wish they’d learned money basics earlier, and while 29 states now require finance classes in high school, they often arrive too late to help.
3. What’s Driving Their Debt?
Over $94,000 in Personal Debt
On average, Gen Z carries $94,000 in personal debt—more than Millennials or Gen X. Much of this comes from credit cards, student loans, buy-now-pay-later (BNPL) purchases, and auto loans.
Many Gen Zers now enter adulthood with high debt—student loans, medical bills, or credit card balances—long before they feel ready.
Student Loans Burden
Gen Z’s average student loan payment is $526 per month, the highest among young adults. Over half say these payments limit their ability to save or invest, or delay decisions like buying a house.
Easy Credit and BNPL Temptations
About 75% of BNPL users in the U.S. are Gen Z or Millennials—and Gen Z uses BNPL more than older groups. These services often encourage overspending—and missed payments can damage credit.
4. Why Is This Happening?
Lack of Early Education
Financial education often starts too late. While school-based lessons exist, many Gen Zers missed out, relying instead on their parents or social media.
Over-Reliance on Parents
Half of U.S. parents reportedly give their Gen Z children about $1,474 per month—a safety net that may discourage financial independence or developing budgeting skills.
Confusion from Too Much Info
Gen Z gets financial advice from social media, TikTok “finfluencers,” apps, and ads—but often these messages are inconsistent or misleading, leading to confusion or poor decisions.
5. How It Feels to Be Gen Z Today
“Soft Saving” Lifestyle
Gen Z is adopting a style called “soft saving”—saving a little but prioritizing current quality of life over long-term plans. Only 16% save specifically for retirement, though more follow general budgets.
Stress and Negative Wealth
Money is a major stressor: about 60% say it’s taking a toll on their mental health. Some Gen Z even believe they have negative wealth—debt exceeds assets—holding back life goals.
Delay in Life Milestones
High debt and cost of living are forcing many Gen Zers to delay major life choices—like buying a home or starting a family—even when they hope for those goals.
6. Still, Some Strengths and Proactivity
Faster Savings Than Older Generations
Many Gen Zers save about 6–10% of their income, higher than other age groups. They also seek financial advisors—even if cost and trust stand as barriers.
Wise Side Hustle Habits
Over 55% hold side jobs—not just for extra cash, but to address debt, save, or experiment. It’s part of their strategy for independence and security.
Retirement Awareness
Despite challenges, Gen Z seems to be saving earlier: they already have three times the retirement assets that Gen X had at the same age. Many save up to 20% of income, setting aside funds earlier than predecessors.
7. Why Financial Literacy Matters
Research has shown that better financial literacy dramatically lowers debt risk. Financial education helps more than income or schooling alone—it changes habits.
One study showed that teaching young teens about finance improved spending behavior, confidence, and long-term thinking about money.
8. Simple Steps to Help Gen Z Get Ahead
Parents: Teach, Don’t Just Give
Instead of handing over money, parents can teach budgeting, credit use, and saving through small allowances or involvement in family finances.
Schools: Start Early
Financial education should begin before high school—simple lessons on checking accounts, credit, and taxes can build confidence before Gen Z reaches college.
Use Real-World Tools
Online banking, budgeting apps, and small-scale investments (e.g., buying stocks in brands they know) help translate abstract lessons into real learning.
Manage and Prioritize Debt
Focus on paying down high-interest debts first (credit cards, BNPL). Keep monthly debt payments below 36% of monthly income for financial flexibility.
Build Credit Smartly
Credit cards used carefully, and responsible borrowing (like small auto loans), help build credit—essential for later steps like mortgages.
9. The Big Picture: What It Means for the Economy
- High Gen Z debt can limit economic growth: fewer young homebuyers, lower small-business investment, and delayed major life events.
- Financial stress affects mental health and life satisfaction—a factor in overall societal well-being.
- Educating Gen Z now could reduce long-term vulnerability—lowering debt, boosting savings, and improving financial resilience.
10. Looking Ahead: What Gen Z Needs
- Early intervention: Start teaching kids basic money skills before high school.
- Practice and repetition: Use real money moments—budgets, bills, side hustles—to build confidence.
- Financial access: Tools like Roth accounts, HSAs, credit-building products, and employer support can help.
- Policy support: Financial wellness programs, loan assistance, and homeownership programs aimed at young people may ease pressure.
Final Thoughts
Generation Z is facing its financial life with a heavy load: poor financial literacy and high personal debt make homebuying, career planning, and saving difficult. But what’s most important is this: many Gen Zers want to learn, want to save, and work hard at side hustles to improve.
The path forward is clearer than ever:
Reinforce budgeting, saving, and investing habits,
Support early financial education,
Encourage real-world money management skills,
Help them pay down debt and build credit responsibly,
