It is no secret that the high cost of living has made it increasingly difficult for young adults to achieve financial independence. A recent report from Bank of America revealed that 46% of Gen Zers between the ages of 18 and 27 rely on financial assistance from their families. This dependency on parents highlights the significant challenges young adults are facing in today’s economy.
According to the same report, 52% of Gen Zers feel that they do not make enough money to live the life they want. Day-to-day expenses, such as food, gas, and housing, are cited as top barriers to their financial success. The rising cost of living has put a strain on young adults, making it difficult for them to cover basic necessities without financial assistance.
Young adults today are facing unique financial challenges when compared to previous generations. Not only are their wages lower, but they are also burdened with larger student loan balances. Reports show that Gen Zers are spending more on necessities than young adults did a decade ago, further exacerbating their financial struggles. Additionally, a significant portion of Gen Zers have maxed out their credit cards, putting them at risk of falling behind on payments.
One of the biggest financial challenges for young adults is housing affordability. Second only to food and groceries, housing is the most significant expense that young adults need help with. Many young adults are spending well over 30% of their take-home pay on housing, with some shelling out upwards of 50%. The high cost of housing acts as a significant barrier to financial independence for young adults.
It is not just Gen Zers who are struggling with financial insecurity. A separate survey by Bankrate found that most Americans do not feel that they earn enough to live the life they want. Only 25% of survey respondents said they feel completely financially secure, down from 28% previously. The survey also revealed that Americans would need to earn a substantial income to feel comfortable and rich, highlighting the widespread financial challenges faced by individuals of all ages.
The recent inflationary pressures and rising housing costs have further exacerbated financial challenges for young adults and Americans in general. The sticker shock from elevated prices, lack of income gains, and specific challenges related to housing affordability and college costs have contributed to a feeling of financial insecurity among individuals. These challenges highlight the need for sustainable solutions to address the root causes of financial struggles faced by young adults and Americans as a whole.
Overall, the financial challenges faced by young adults in achieving financial independence are complex and multifaceted. From the high cost of living to rising housing costs and student loan debt, young adults are navigating a difficult financial landscape. Addressing these challenges will require a multifaceted approach that includes increasing wages, reducing student loan debt, and improving housing affordability. By addressing these root causes of financial insecurity, we can help young adults achieve financial independence and build a more secure financial future.