Young Americans Reshape Finances Amid Economic Pressures

Forbes

22-04-2025

Young Consumers Managing Money
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From pandemics and environmental crises to rising inflation and tariffs, young Americans are navigating an economic landscape defined by unpredictability. The impact of high interest rates, a skyrocketing housing market and stagnating wages mean that Millennials and Gen-Z in particular are feeling the squeeze. But how these age groups are approaching economic pressures is shifting, and it doesn't follow the well-thumbed financial playbook of prior generations. Young people are adapting their financial habits in real time, re-evaluating their spending habits and redefining their long-term financial strategies.
'It's not just about budgeting anymore,' said Gen-Z finance expert and CEO of finance community Frich, Katrin Kaurov. Gen-Zers 'want to understand how money fits into every aspect of their lives…whether they can afford to go on a second date, if their friends are spending hundreds on therapy, or if it's smart to buy from the TikTok shop. Financial decisions used to mean checking your accounts or investing, but now every single tiny decision a Gen-Zer makes is inherently money-driven.'
Rethinking spending in an uncertain economy
As Gen-Zers age out of education into their early careers - managing their own money for the first time - and Millennials enter peak earning years, both generations are being forced to reassess their spending priorities. In a stable economy, budgeting can feel like a side task or a nice-to-have. But today, amid high inflation and global uncertainty, it has become a form of self-preservation. The current economy is taking its toll on America's young people; according to a recent Prosper Insights & Analytics survey, over 58% of Gen-Z and 55% of Millennials report feeling only somewhat in control of their financial lives.
Prosper - Live For Today
Prosper Insights & Analytics
Young people are counteracting this in their own ways, cutting back in certain areas. According to the same Prosper Insights & Analytics survey, 49% of Gen-Z and 45% of Millennials are dining out less, while 34% of Gen-Z and 28% of Millennials are reducing entertainment spending. AI-powered finance app Piere's data backs this up, as 30% of users see food delivery services as unnecessary. These behavioral shifts point to a growing generational priority: survival over lifestyle upgrades.
Prosper - Deferred Purchases Over Last 30 Days
Prosper Insights & Analytics
'This generation isn't waiting for the economy to stabilize,' said Aleksandra Medina, co-founder and CPO of Frich. 'We're also seeing many opt out of lifestyle inflation: whether that's staying in and cooking, having movie nights with friends, or cancelling their non-essential subscriptions.'
'Financial anxiety shows up in the everyday moments,' added Yuval Shuminer, CEO of Piere. 'Choosing between buying groceries or covering a bill, second-guessing a purchase, or just wondering if you're 'doing it right.' For a lot of our users, it's not just about the big-ticket decisions, it's the mental weight of constant trade-offs.'
Debt, credit, and the struggle for stability
Millennials in particular are carrying increasing financial burdens. Nearly 40% of Millennial Piere users have leaned more on credit cards in the past year to cover everyday expenses. One in five spent over $500 more than usual. A recent Prosper Insights & Analytics survey shows that only 32% of Gen-Zers and 40% of Millennials pay off their balances in full each month, with 16% of each group paying only the minimum.
Prosper - Payment of Credit Card Balance Monthly
Prosper Insights & Analytics
'Millennials aren't just reacting, they're recalibrating,' Shuminer added. 'They're using credit to stay afloat in the short term, but they're also carving out space for their future. It's not always tidy, but it's smart, adaptive, and resilient - exactly what the moment demands.'
In fact, Piere reports a 30% increase in savings deposits during the same period, suggesting that many are working hard to prepare for emergencies, even if it means juggling debt at the same time.
For Gen-Z, many of whom are still in the early career stages or completing their education, the tension between short-term and long-term financial goals is just as intense. 'Many Gen-Zers find themselves walking a financial tightrope,' said Medina. 'They're torn between covering immediate costs and preparing for emergencies, while inflation, student debt, and housing instability make saving feel nearly impossible. There's a lot of pressure to do both but not enough income or security to make it happen consistently.'
'It's hard to feel confident about long-term planning when the world itself feels unpredictable,' she added. 'From political instability and environmental crises to pandemics and natural disasters, Gen-Z is growing up with a front-row seat to volatility. The outdated belief that if you work hard, good things will happen just doesn't work anymore.'
Delaying major milestones
The financial strain is not only affecting day-to-day decisions: it's reshaping entire life plans. According to Piere, nearly 60% of Millennial users report delaying a major milestone like buying a home, getting married, or starting a family due to financial pressure. 'The old playbook says buy a house by 30, start a family by 35. However, that just doesn't line up with what many Millennials are facing today,' said Shuminer.
'We're seeing a clear shift away from traditional status symbols and toward financial flexibility, emotional security, and long-term peace of mind. It's not about falling behind, it's about adapting to a world where stability is earned, not assumed.'
Among Gen-Z, this shift is even more foundational. Rather than delaying goals, many are rewriting them entirely, choosing to monetize hobbies, focus on mental wellbeing, or seek non-traditional careers that prioritize freedom and purpose.
'One trend in particular that stands out is how so many Gen-Zers have taken to launching their own side hustles - earning money by making TikTok content or running an Etsy shop—which monetize their hobbies,' said Medina. 'Even if side hustles are short-lived, the impact they have on Gen-Z can be long-term.'
The future of financial decision-making
Both Frich and Piere are part of a new wave of digital tools that empower young people to take back control of their finances: not by restricting their spending, but by giving them insights into how to control their money. 'Piere is built to find money that's hiding in plain sight,' Shuminer added. 'We're not here to tell people to skip their latte or feel guilty for spending. We focus on surfacing the stuff they can't see.'
'When people see what others like them are spending, it removes the guesswork and guilt,' said Kaurov. 'For Gen-Z, comparison is about community, context, and understanding what's normal or achievable, rather than negative comparison.'
'Gen-Z is often unfairly compared to older generations who bought homes at 25 or graduated without student debt, but the world has changed, so those comparisons aren't useful,' she continued. 'If you think about it, we're benchmarked in every other aspect of life…But when it comes to money, most people have no idea what's typical. That creates stress, uncertainty, and a constant feeling of 'Am I doing this wrong?''
So far, the economic pressures of 2025, which have included rising debt, an unexpected spike in inflation and crashing markets, have forced young Americans to confront their finances head-on. But their reactions to an anticipated recession are unlike those we've seen before, and the long-term economic implications of these behaviors are yet to be seen. For the personal finances of Gen-Z and Millennials, however, the fluctuating economic circumstances are only encouraging a greater focus on what young people do with their money - and why.