Gen Z savings are way lower than Gen X and boomers—here's the real problem: 'Horribly falling behind'

It is no news that many Gen Zs are struggling financially. Given the current economy, many young people are unable to afford what used to be considered basic. Savings have also become a far-fetched reality and for those active in the practice, the amounts are the bare minimum or less. It was revealed that Gen Z is saving £100 ($129) less per month than the older generations, per This is Money. However, some reasons can explain the decline. The further statistics of a steady reduction in saving money and the factors that affect the numbers explain the struggle, and Gen Z cannot bear 100% of the blame.

The data revealed that 70% of Gen Xers had enough savings to cover them during an emergency. However, over the years, this percentage has dropped, causing only 59% of Gen Zs to save for times of crisis. Sarah Coles, head of personal finance at Hargreaves Lansdown, offered insight as to why younger adults have such grave issues with frugality and finance. She noted, “Gen Z and millennials are falling horribly behind previous generations when it comes to hitting life's milestones and building up huge problems for their financial resilience, both over the long and the short term.” 

Coles highlighted the possible reasons for the outcome. Firstly, she noted that Gen Zs are earning way less than the older generations. “Starting out in adult life they tend to have lower incomes, and while it will build as they get to their 40s, so will their responsibilities in life,” she explained. She added that there are so many expenses to cover that “staying on top of their finances” has become a struggle. Another source revealed that a quarter of 18-35-year-olds have savings that are less than $645 (£500), per Yahoo News. It was further highlighted that 60% of this category relies on gifts or inheritance to add to their savings. 

That’s not all. In terms of investment, not many from the younger generations have things aligned. While 40% of Gen Xers have their pension savings and 49% have invested in insurance, the Gen Zs' percentage drops to 31% and one-third, respectively. Coles noted the problem—the economy and its cruel hike. “The cost of putting a roof over their heads is a huge issue. Higher house prices are trapping more of them in rental properties and runaway rents have taken a terrible toll.” The expert mentioned that Gen Zs and millennials who are renters are “doing worse” financially.

Moreover, Coles explained that buying houses, too, isn’t giving as much benefit as it would to the Gen Xers. “Even after they've bought, they don't always have much equity in their property. As a result of this – and the fact they bought later when house prices were higher – they often have larger mortgages and face higher average monthly payments. There's a risk this means they're overstretched and running up debts,” she noted. It is recommended that younger people pull up their socks and start saving, in terms of investment, pension funding or any other mode of saving. Coles also noted that gifts and other help from older generations would “help them climb up the ladder.”