Gen Z, younger millennials more financially stressed, survey says

Americans across all age groups are experiencing money stress, according to the American Psychological Association's (APA) 2023 Stress in America survey. But Gen Z and younger millennials are feeling the pinch the most and have the highest rates: 82% of survey respondents in the 18 to 34 age group said money is a significant stressor. The driving forces behind the financial stress have a lot to do with factors out of their control. 

A changing world 

COVID-19 turned the world we knew upside down. The “new normal” is no longer new and everyone is dealing with the aftermath, even if our main coping mechanisms are denial and amnesia. Despite efforts to “move on,” the APA’s survey notes that every age group demonstrates signs of collective trauma. 

“The psychological damage or stress that comes from being cut off from friends, potentially family, the whole world shifted. And generally, there's this overall feeling of 'I'm not safe' or 'My safety isn't guaranteed,'” said Nathan Astle, certified financial therapist and founder of Financial Therapy Clinical Institute.  

The APA survey found that health-related stressors tied with money (both 82%) as the top sources of stress for the 18 to 34 age group. At the confluence of these stressors, data from the Nationwide Retirement Institute 2023 Health Care Costs in Retirement Survey show that 24% of Gen Z and 22% of millennials surveyed are postponing or delaying medical care because of high inflation. 

An uncertain future 

While financial stress is rampant across all generations, Gen Z and millennials face an economic reality far different from their parents or grandparents. 

The narrative of “Just work harder!” or “Pull yourself up by the bootstraps” simply doesn’t apply to everyone. 

“School is four times as expensive as it was for our parents. Houses are twice as expensive, adjusted for inflation. The dream we were fed doesn't match with our actual economic realities,” said Astle.

It’s no longer a matter of simply being cash-strapped in college or graduating into the next phase of life. “As a generation … it’s not just that, ‘oh you know, like the poor college days’, it's like ‘I genuinely don't think that there's a future for me.’ And I think that's a different type of financial stress that's more lingering,” said Astle.

High cost of living 

Based on the APA survey data, 58% of 18 to 34-year-old respondents who reported money as a significant stressor say paying for essentials is causing them stress. Shelter, food, and transportation already take up a large part of anyone’s budget. But for younger generations, especially those just entering the workforce and earning money, making ends meet is harder to do. 

A 2024 report by Bank of America on The State of Gen Z’s Financial Health reports that 52% of Gen Z says they’re not making enough money to live the life they want and the cost of living is one of the major challenges they face. To make it work, 54% of respondents report receiving financial assistance from family, friends and the government. 

Housing costs and inflation have had a pernicious effect on Americans’ financial well-being. The sticker shock on costs of goods is far from imagined and there’s a stark difference between pre-COVID and now. The Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) inflation calculator shows this very clearly. 

To have the same purchasing power as $100 in January 2019 you’d need $124.96 in July 2024. That’s nearly a 25% increase in five and a half years.  

For context, $100 in January 2014 had equal buying power as $109.69 in July 2019, an increase just shy of 10%.

As of the second quarter of 2024, the average sale price of houses sold in the United States stood at $501,700, according to data from the Federal Reserve Bank of St. Louis. That’s a significant spike from five years prior when the average price was $376,700 in the second quarter of 2019. 

The oldest of Gen Z was born in 1997 when average house sales were just $175,400 at the end of the year.  

Dealing with this financial house of cards means navigating a world where traditional financial advice doesn’t apply. What worked for their parents and grandparents won’t necessarily work for them at all, despite their best efforts. 

“I think there's a certain level of very understandable cynicism there, which also leads to this financial stress. Not just like ‘What's going on with my money?’ but just the general feeling of ‘Will things get better?’” said Astle.

With such a tenuous foundation, it’s no wonder Gen Z and younger millennials lead the pack when it comes to financial stress. No one is a fortune teller and can predict the future. But we know that building a fortune in the future will be much harder.