The Grim Future of Gen Z: Alarming Findings Show They Are Ill Prepared

THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE SEE MY DISCLOSURES. FOR MORE INFORMATION.

Boomers mock Gen Z for their social habits, entitlement, and poor money habits.

The reality is Gen Z isn’t that bad regarding their finances.

Many are saving for the future and hoping to own a home.

However, few budget their money, and worse, they are close to clueless about the cost of a home.

Here is where Gen Z stands financially, according to a recent survey.

Nearly Half of Gen Z Spends More Than They Earn

In a recent survey of Gen Z’s finances, 43% admit to spending more than they earn.

The survey did not detail whether this overspending was simply from a high cost of living and trying to make ends meet or if it included discretionary spending that could be reduced.

Spending more than you earn for even a few months can lead to a dangerous financial picture if things aren’t corrected.

Close to 70% Are Trying to Save Money

The good news is the survey did note that 70% are saving money.

This is good to hear because putting money aside is the only way you will get ahead financially.

Most Do Not Budget

Even though the majority of those surveyed make it a priority to save money, only 51% have a budget.

This means that many Gen Zers could be leaving money on the table, both in terms of saving more or seeing where they are overspending and making adjustments.

Top Budgeting Categories

Of those that do budget their money, here are the top five budgeting categories:

• Food: 80% budget for this expense
• Rent: 65% budget for this expense
• Utilities: 54% budget for this expense
• Transpiration: 51% budget for this expense
• Entertainment: 48% budget for this expense

While budgeting can seem daunting, the good news is that the 50/30/20 rule can make a tremendous difference in spending and saving.

Top Goals For Saving Money

What goals is Gen Z saving their money for?

Here is a breakdown:

• Buying a home: 56%
• Building an emergency fund: 39%
• Retirement: 12%
• Taxes: 10%

It is great to have saving goals, but it can be difficult at times to prioritize how you spend, or for that matter, how to organize your money to get you to a stronger financial foundation.

This is where Dave Ramsey’s Baby Steps can help. They provide a clear-cut plan for improving your finances over time so that you use your money in ways that benefit you most.

Most Gen Zers Want to Buy a Home

As we saw, 56% are currently saving for a home, but many more have a goal of homeownership.

Over 44% want to own a home within the next five years, and close to 36% aim to buy in 10-15 years.

Another 20% think this purchase will happen further in the future.

But Admit Challenges Are Real

When buying their home, they know they will face many obstacles.

Here are the top five challenges Gen Z expects to face:

• Having enough for a down payment: 22%
• Not knowing where to start: 21%
• Finding a home in their price range: 18%
• Have good enough credit: 16%
• Having too much student loan debt: 11%

Even Worse, They Underestimate How Much a Home Costs

Gen Z’s challenges are real, and it is important to remember the cardinal rule of home buying: do not buy a house you cannot afford.

The last thing you want to be is house rich and cash poor as it impacts all other areas of your life.

And in some cases, it can make living miserable.

Sadly, 81% of them do not have realistic expectations when it comes to home prices.

The median sales price in the U.S. is $363,300; of those surveys, most assume the cost to buy a home is $223,468.

This can cause all sorts of issues, from not having enough for a down payment to not being able to find a house they want to own.

Most Get Financial Advice From Their Parents

Finally, nearly 40% of Gen Z get financial advice from their parents.

Another 12% get advice from social media.

The good news is they are getting financial advice.

The bad news is there is no guarantee the people they are getting advice from know what they are talking about.

Since schools don’t teach personal finance, we must learn it independently.

This can lead to missing out on important concepts or thinking some bad advice is actually good.

The Future Is At Risk

While there are some good habits Gen Z is following, like saving money, the reality is too many overspend.

And worse, most do not have a grasp on reality when it comes to buying a home.

Granted there is still time for things to improve, but depending on who they get their financial advice from, they could be struggling for a long time.

More From Money Smart Guides

The idea of free money sounds like it can’t be true. But it actually is.

There are many ways you can get free money, from playing games, to watching videos, and more.

Here are the best ways you can get free money without having to work for it.

HOW TO GET FREE MONEY

Adulting 101

Growing up is part of life. Sadly, most schools don’t teach personal finance, so adulting when it comes to money can be complicated.

Luckily, here is a guide to adulting so you can more easily figure things out, without making major mistakes.

The Ultimate Guide To Adulting 101

Steps To Building Wealth

We all want to have enough money that our finances are no longer a stress in our lives.

But with so much financial advice out there, building wealth seems impossible. Not any more. Here are the simple steps you need to take.

STEPS TO BUILD WEALTH AND BECOME RICH

How To Survive On $1,000 A Month

Do you find yourself in a situation when money is beyond tight? Are you not sure how you will make it to the end of the month with such limited income?

Fear no more. Here are the steps to take so you can survive on a small amount of money.

LEARN HOW TO SURVIVE ON $1,000 A MONTH

Good Money Habits To Have

In order to get ahead financially, we need to develop good habits. Most people talk about bad money habits to get rid of.

Here are good money habits you need to follow if you want to take the next step financially.

17 GOOD MONEY HABITS TO DEVELOP

The data for this article can be found here.