Every generation endured financial challenges and hardships of one kind or another. Most recently, of course, the millennial generation was walloped by the Great Recession and financial crisis, as well as skyrocketing costs related to housing and education. Gen Z, now coming up as the younger generation, will likewise experience financial challenges and economic hurdles.
Though many of the financial challenges faced by younger generations are often similar in form, they can differ in some ways. For example, most generations need to figure out simple budgeting and spending techniques. They need to save and invest for retirement. They need to figure out how to pay for cars, homes, and families.
Even if different generations view money in different ways, there are likely more similarities at the root of it all.
With that said, though, Gen Z, specifically, is facing some unique financial challenges in the years ahead. Here’s a rundown of some of those economic hurdles:
Inflation and rising prices are the topics of our times, and Gen Z is going to bear the brunt of it as they, collectively, end up spending more of their paychecks on everyday goods and services. It’s hard to say just how big of an effect this recent round of inflation is going to have on Gen Z’s financial plans going forward — we likely won’t be able to say for decades. But given that the U.S. hasn’t experienced significant inflation in roughly 40 years, Gen Z is the first generation in a long time that’s going to need to contend with it at a young age.
We can’t overlook the pandemic, as it is perhaps the most impactful event of many Gen Zers’ lives on a broad scale. The last time the U.S. experienced something similar was all the way back in 1918 when the Spanish Flu killed millions. While the death toll from the pandemic is difficult to contend with now in the 2020s, the economic disruption wrought by the pandemic is hard to overstate.
The truth is, too, that a lot of those disruptions probably won’t be erased or unraveled for many years. The inflation we’ve experienced recently is largely due to the pandemic, for instance. And the subsequent action by the government to increase interest rates, among other things, can also be traced to the pandemic.
Education and housing costs
Education and housing costs may be wrapped up in inflation, but the two categories have been seeing significant price increases for decades now. Millennials can tell Gen Z all about it — but these days, college and home costs are even higher than they were 10 or 15 years ago. This, again, is going to hurt Gen Z in the long run, as they’ll need to go deeper into debt or spend more of their paychecks trying to pay for essentials.
Economic and political instability
Finally, we’re seemingly at a time of incredible economic and political instability in the U.S., and the two are closely, if not entirely, linked. It’s been some time since the U.S. has been so divided politically, and that’s going to slow down progress in Congress — be it passing legislation to help aid student borrowers, or anything else. We don’t know what the future holds, but the political and economic discourse in the country does feel quite a bit different today than it did 10, 20, or 30 years ago.
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