Experts suggest that anxiety during the pandemic may have led to poor spending habits.
"What's wrong with your generation is..." is a common comment made by older generations to younger ones, and Gen Z has given them even more fodder for these remarks. According to a new report by The Wall Street Journal, Gen Z is accumulating debt faster than any other generation. From credit cards to student loans, the youngest cohort of borrowers has their hands full.
A free online financial service Credit Karma has revealed that Generation Z is facing a unique set of financial challenges, exacerbated by rising inflation and the lingering effects of the COVID-19 pandemic.
Generation Z, defined as those born between 1997 and 2012, will live in a society where the cost of living has risen by almost 32% in the last ten years. Due to this, many find it impossible to pay for needs like food and accommodation and have turned to utilising credit cards as a last resort.
According to Forbes, before the pandemic, way back in 2018, an independent study estimated that Gen Z's direct and indirect spending power reached up to $143 billion. That's a level of financial influence that made brands stand up and take note. Now, as more of this generation reaches adulthood, the number should be rising. But the pandemic eliminated most entry-level jobs that this generation would have had, and competition is stiff for any open positions.
Mental health professionals caution that Gen Z youngsters' anxiety during the pandemic may have led to bad spending habits as a coping strategy when they made the move from home to college or the workforce.
These elements, along with the growing cost of living, have brought about "a perfect storm of consequences" for Gen Z's financial security, according to some analysts.