Are Young People Today Really Doomed Financially? A Closer Look at Gen Z
Hey everyone, it’s John. It feels like every time you scroll through the news, you see a headline about how tough things are for young people these days. We hear that “Gen Z” – that’s anyone born roughly between 1997 and 2012 – is facing a huge uphill battle when it comes to money. But is it really all doom and gloom? Is this generation truly out of luck financially?
My assistant Lila and I were curious, so we decided to put the headlines aside and look at some actual numbers. We wanted to compare Gen Z to previous generations (like Millennials, Gen X, and Baby Boomers) when they were the same age. The results were pretty surprising! Let’s break it down together in a way that makes sense, even if you’re brand new to all this money talk.
First Up: The Dream of Owning a Home
For many people, owning a home is the biggest financial goal they have. It’s a classic sign of “making it.” So, how is Gen Z doing on this front? We looked at the numbers for a typical 25-year-old.
Here’s the surprising part: About 28% of 25-year-olds in Gen Z own their own home.
You might think that sounds low, but when you compare it to previous generations at the exact same age, it’s right on track. It’s basically the same rate that Millennials and Gen X had when they were 25. So, despite stories about impossibly high house prices, Gen Z is keeping pace with their parents and older siblings when it comes to getting that first foot on the property ladder.
Lila: “Okay, John, but why is owning a home such a big deal anyway? Is it just about having a place to live?”
That’s a fantastic question, Lila. For most people, their home is the most valuable thing they will ever own. As you pay it off over the years, you build something called equity. Think of equity as your slice of the home’s value that you truly own. Over time, as the home’s value hopefully goes up and your loan goes down, your equity grows. It’s a powerful way to build wealth for the future. So no, it’s not just about having a roof over your head; it’s a major financial stepping stone!
What About Paychecks? A Look at Income
Alright, so homeownership is steady. But what about the money coming in? Are young people today earning less than their parents did? This is where we found the biggest surprise.
When we look at the median income for 25-year-olds, Gen Z is actually earning more than any previous generation did at that age, even after we account for rising prices.
Lila: “Wait a minute, John. What do you mean ‘after we account for rising prices’? That sounds like a technical term.”
You’re right, Lila, let’s make that simpler. The official term is “adjusting for inflation,” but let’s use a pizza analogy. Imagine in 1995, your first job paid $30,000 a year, and a large pizza cost $10. You could buy 3,000 pizzas with your annual salary. Today, a similar job might pay $55,000, but that same pizza now costs $18. With today’s salary, you could buy about 3,055 pizzas. Even though the price of everything went up (that’s inflation), your ability to buy stuff—your real income—is slightly higher. The data shows that Gen Z’s paychecks have grown even faster than prices have, giving them more buying power than young people had in the past. That’s a huge advantage!
The Elephant in the Room: Student Loans
So far, things are looking pretty good for Gen Z. But there’s one area where they are facing a much bigger challenge, and it’s a big one: student loan debt.
This is where the story shifts. The financial burden of education is significantly heavier for this generation. Let’s look at the numbers for a typical 25-year-old with student debt:
- The median student loan balance for a 25-year-old in Gen Z is $20,900.
- For a 25-year-old Millennial (at the same age), the median balance was about $17,300 (in today’s dollars).
That’s a pretty big jump. While Gen Z is earning more money, a larger chunk of that income is immediately spoken for by loan repayments.
Lila: “So, it’s like getting a bigger paycheck but finding out your rent also went up by a lot. It must feel like you’re running in place sometimes.”
That’s the perfect way to put it, Lila! It’s like having a faster car (the higher income) but also having a much larger monthly car payment. That required payment eats into the extra money you’re earning, making it harder to save, invest, or spend on other things. This is the main financial headwind that makes Gen Z’s situation feel tougher, even with their higher incomes.
So, What’s the Final Verdict?
Is Gen Z out of luck financially? The data shows us that the answer isn’t a simple “yes” or “no.” It’s a mixed bag, a picture with both bright spots and shadows.
The Good News for Gen Z:
- They are earning the highest real incomes of any young generation in history.
- They are keeping pace with previous generations on homeownership.
- They are also the first generation to grow up with easy access to investing through apps, meaning many are starting to invest their money earlier than ever before.
The Challenges for Gen Z:
- They are saddled with significantly more student loan debt.
- They are facing the highest housing costs (both for renting and buying) we’ve seen in a long time, which makes saving for a down payment incredibly difficult.
The popular story that Gen Z is financially doomed is just too simple. The reality is more complex. They have some real advantages their parents didn’t, but they also face unique and very real obstacles.
A Few Final Thoughts from John and Lila
John’s Take: Looking at all this, it strikes me that every generation gets its own unique set of economic circumstances. There’s never a “perfect” time to start your financial life. The key isn’t to wish for a different time, but to play the hand you’re dealt as wisely as you can. For Gen Z, that means leveraging that higher income while having a very clear plan to tackle debt.
Lila’s Take: As someone who is closer to this generation, I find this really interesting! It’s easy to get caught up in the negative headlines, and honestly, it can be discouraging. Seeing that our incomes are actually higher is a relief, but it’s also a wake-up call about how seriously we need to take things like student loans and the high cost of living. It tells me that being smart with money isn’t just an option anymore—it’s a necessity.
This article is based on the following original source, summarized from the author’s perspective:
Is Gen Z Out of Luck Financially?