Gen Z is getting serious about their finances. What's in the way?

USA Today

8 hours ago

Members of Generation Z are becoming more financially independent, a likely welcome reprieve for the bank of mom and dad.
Over the last 12 months, 72% of Gen Z took steps to improve their financial health, and fewer Zers are relying on monetary support from family, according to a new Bank of America survey of 1,069 adults. Between rent and groceries, young Americans aren't happy with the high cost of living but they're reacting to it responsibly, according to Holly O'Neill, Bank of America's president of retail, consumer and preferred banking.
While they may be known for challenging traditional workplace norms and the Gen Z stare, Zoomers are also leading the way in prioritizing income diversification, entrepreneurship, and values-based spending.
'Gen Z is learning adulting is expensive, but the good news is they're taking it in stride' O'Neill said. 'They're saving more and investing. I think they're feeling pretty good, given where they are.'
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Progress toward financial independence
While not all 18- to 28-year-olds have left their parents' payroll, the percentage of Gen Zers who rely on family financial support is now 39%, down from 46% last year.
Taylor Price, a Gen Z personal finance expert and founder of Priceless Tay, a platform and coaching program teaching young people how to thrive financially, said that decrease doesn't only reflect Gen Z growing up.
'It's about us waking up financially, "Price told USA TODAY. 'Today, getting rich is a decision, not a dream. The tools and education are publicly available with no minimum net worth required.'
Gen Zers who are still financially dependent on family are also receiving less. The survey found 22% receive $1,000 or more per month, down from 32% a year ago, and 54% receive less than $500 monthly compared to 44% last year.
A separate savings.com report found groceries, cell phone bills, and rent or mortgage payments top the list of costs parents help their adult children cover.
Gen Z's financial green flags
Financial wellness may be a team sport for Gen Z.
Of those surveyed, 66% said they don't feel pressure from friends to spend beyond their means. The group values transparency, and 42% don't mind declining an invite and telling friends they can't afford an activity.
A majority focused on reducing expenses in the last year, including 41% who cut back on dining out. More than half put money toward savings and 24% paid down debt.
'They're overall inspired to put themselves on a path to financial independence,' O'Neill said. 'As you can imagine, when you're starting out, things are a little more expensive than you thought.'
Although they're building good habits, a third are still stressed — 52% of whom cite economic instability as a reason why. But that anxiety leads 90% to take action, the survey found. A majority are checking their bank account balance and budgeting. Nearly half are getting ahead on paying bills.
Gen Z's 'treat yourself' mentality
For some, money stress isn't motivating. In fact, about a third of Gen Zers surveyed said they're likely to avoid thinking about money and treat themselves to a purchase when they're worried about finances.
More than half buy themselves a small 'treat' at least once a week to celebrate an accomplishment or find a silver lining on a bad day. For 59%, those treat-yourself moments lead to overspending.
'It's less about the treat itself and more about the lack of boundaries around it,' Price said. 'A $7 matcha isn't going to ruin your financial future, but daily impulse spending without a plan will.'
What is holding Gen Z back financially
Gen Z lists the high cost of living as a barrier to financial success. Total monthly spending is higher than 35% of Gen Z thought it would be. Specifically, 63% were surprised by the cost of groceries, 47% were caught off guard by rent and utility bills, and 42% were not expecting the high price of dining out.
Gen Z also isn't making as much money as they would like. Over half said they don't earn enough to live the life they want and 55% don't have adequate savings to cover three months of expenses.
While 42% of Gen Z view saving for retirement and 35% see investing as important steps to financial independence, only a quarter contributed to a retirement account in the last year. One in five invested in the stock market, up slightly from recent years.
That said, a 2024 Transamerica Institute study found that Gen Z started saving for retirement at the median age of 20. That's a 15-year head start compared to baby boomers, for whom the median age to begin was 35.
Financial tips for Gen Z
A detailed financial plan can go a long way in relieving money stress.
'Financial stress can either paralyze you or push you. The key is finding a balance,' Price told USA TODAY. 'For Gen Z, it's about building systems that run in the background.'
That's where Price's 'Rich Routine' comes in. She recommends automating savings, contributing to investments, and splitting paychecks across fixed bills, flexible spending, and future goals.
O'Neill recommends the 50/30/20 budgeting method, stacking up emergency cash, and limiting impulse purchases.
'When your money has a plan, you don't have to think about it 24/7,' Price added.
When expenses feel unmanageable, Price says, income is how people can take back control. She recommends pursuing a side hustle to create some financial breathing room and preparing for a raise, not waiting for one.
'Track your wins at work, quantify your impact, and practice negotiating,' she said. 'Explore roles or industries with growth potential. Sometimes the real unlock is making a strategic pivot.'
Reach Rachel Barber at [e-mail] and follow her on X @rachelbarber_