10 Tragic Money Problems Hurting Young People Today

The American Dream certainly isn’t dead, but it has gotten more difficult to achieve. Gone are the days when one breadwinner could support a family of four in a house that was bought and paid for.

Instead, young people are looking for ways to reduce financial stress that their predecessors didn’t have to face — from housing to education and beyond.

So what exactly is holding Gen Z back from living their best financial lives?

Conventional American wisdom dictates that after you graduate high school, you go to a four-year college and get a bachelor’s degree. Unfortunately, the cost of tuition is significantly higher than it used to be — twice as much in some cases.

That can mean that college is out of reach for some young people, in turn resulting in poorer financial outcomes since bachelor’s degrees are a key to economic mobility.

Since college is so costly, more young people than ever have to take out student loans to finance their education. 

Because of this reality, the average college grad has over $17,000 in debt, which of course has to be paid off. That’s money that could have gone to other expenses, like housing.

There’s also the added pressure to go to graduate school, which can add an additional $30,000 to the debt pile.

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While many sectors of the labor market appear to be on fire in the wake of the labor shortage, new college grads are having a rough go finding well-paying work in their field. In fact, over 40% of them are working in positions that don’t require a bachelor’s degree.

Given this predicament, these Gen Zers are making less money than they should, which could have a permanent impact on their financial futures.

Rent has always been too darn high, but in recent years it’s become especially pricey. Over 70% of renters saw a 14% increase in their monthly payments between 2021 and 2022. In some markets, it jumped to 25% or more.

Given that four renters out of 10 already fork over nearly a third of their gross income on rent, you can see how these conditions can be financially crippling.

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Gen Zers looking to buy a home won’t fare much better than their renting counterparts. Housing costs shot up in the wake of the COVID-19 pandemic when remote work upended the market. This was compounded by supply chain disruptions and material shortages.

Add to that the fact that mortgage interest rates are near the 7% mark and you have the cherry on top of homeownership that seems out of reach.

You don’t have to be an economist to notice that inflation is soaring, making the price of just about everything — groceries, gas, food, durable goods — more than you’re used to. And while price increases have leveled off, inflation is still higher than it’s been in decades.

This adds financial stress for Gen Zers who are already dealing with difficult job prospects and expensive housing costs. Inflation is also responsible for those aforementioned mortgage rates, too.

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A long-term impact of inflation is that young people will have to save more money in order to retire. This is because a dollar won’t get you what it got 20 years ago.

It’s also likely to get worse as time goes by. In 40 years, for example, $1 million will be more like $300,000.

But there’s more: Young people are only saving about 5% of their money, which isn’t enough to retire in a timely manner.

You’d be hard-pressed to find anything on this list not impacted by the COVID-19 pandemic. On top of everything, over 50% of Gen Zers watched their emergency funds dry up.

This puts young people in a vulnerable situation in case of an emergency, which we all know can occur at the drop of a hat as it did in March 2020 when the pandemic hit.

While some schools have added financial literacy into their curriculum, many have not. As a result, many young people may struggle with smartly managing their money.

This includes knowing when to pay bills, how to invest, saving enough money, and learning strategies for crushing debt.

Given all that Gen Zers have to struggle with already, financially speaking, financial illiteracy can very easily make a tough situation even worse.

While this problem won’t impact young people for several decades, they may not be able to count on collecting Social Security. While this fund keeps many seniors afloat, there may not be anything left down the road unless the government bolsters the program.

That puts pressure on Gen Zers to save even more for retirement, a task that is already daunting thanks to the impact of inflation.

Young people have it harder than ever in navigating their financial present and future. This is due to the high cost of seemingly everything, COVID-19 and its fallout, and a job market that’s tricky to navigate.

Fortunately, it’s not all doom and gloom, as this generation is finding clever ways to boost their bank accounts and prioritizing homeownership in spite of the difficulty.

To that end, they just might turn out to be okay in the end, thanks to their scrappy and savvy nature.