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While older generations hold a bulk of outstanding consumer debt in the United States, young adults are catching up.
Gen Z had the highest debt growth of any generation between 2019 and 2020, with the average balance increasing 67.2% from $9,593, CNBC reported. The next closest growth was that of millennials, ages 25 to 40, whose average debt grew 11.5% from 2019’s $78,397 to $87,448.
Despite the growing debt, Gen Z is still well positioned to pay it off, Greg McBride, chief financial analyst for Bankrate, told CNBC. That’s because they have time to pay and to build strong financial habits.
“The sooner you can get in the habit of saving for emergencies and retirement, the better off you’ll be in the long run,” said McBride.
He recommends prioritizing high-cost debt like credit card and other installment loans that tend to have the highest interest rates. But another strategy could be to start addressing the smallest debt first and work one’s way up to the largest.
“For some people, it makes more sense to have the reinforcement of getting some debts paid off,” McBride says. “It might put some wind in your sails and keep you focused.”