Financial Challenges Gen Z Face Amid, After Pandemic
A tough job market, all-time high expenses, inflation derailment on investment returns and the uncertain future of Social Security pose challenges for Gen Z's financial state.
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Chicago — Since Gen Z has grown up, graduated and started careers during the COVID-19 pandemic, the generation is facing major and unique financial hurdles.
According to AOL, here are a few of those challenges:
An unusually tough job market
Securing a job, especially one that pays well, is difficult for members of the generation due to the pandemic.
“Many are graduating with student debt, little to no savings and, of course, limited work experience in an economy that is pulling back on their hiring and/or spending, as well as hiring overqualified people for entry-level positions that were once reserved for recent graduates,” said Brian Hamilton, CEO of One. “Securing a well-paying job is mostly reserved for the lucky and well-connected.”
Those who haven’t graduated yet have also been affected, with teen summer unemployment hitting its lowest point since “the Great Recession in 2020,” Ashley Tran, team leader of investment solutions at Fidelity Investments, pointed out.
Expenses are at an all-time high
Chris Josephs, co-founder of Iris, said Gen Z entered “a working world where everything seems to be inflated except for salaries.”
“Rents, especially in the large cities, car prices, etc. all have increased while the salaries for first-year employment have stayed stagnant. Coupled with student loans, I believe Gen Z will have to be much much more on top of their expenses compared to previous generations.”
This has made sticking to a budget and establishing good credit early extremely important.
“It is crucial that they continue to assess their finances and create a budget that can keep their spending on track,” said Rod Griffin, senior director of public education and advocacy at Experian. “As they enter the credit ecosystem, they should seek information from expert sources about how credit works, why it is important and how to maintain a good credit score.”
Inflation could derail Gen Z’s investment returns
Gen Z may not get to experience the high returns of investing as previous generations did, as “economists are projecting a lower rate of returns on stocks and bonds for Gen Z, mostly due to the threat of inflation,” said Hana Ben-Shabat, CEO of Gen Z Planet.
However, the generation is investing earlier than previous generations, which gives them more time to gain experience.
Social Security may be depleted by the time Gen Z retires
Gen Z will need to take more responsibility for resources they’ll need in retirement “given the likely erosion of government programs like Social Security,” said Ruby Walia, senior advisor for digital banking at Mobiquity. One way of doing that is through having multiple streams of income early on.