PROVIDENCE – Nearly 73% of Gen Zers say they’ve changed their spending habits over the past year due to inflation and the higher cost of living, according to Bank of America Corp.’s annual Better Money Habits survey, the results of which were released earlier this month.
Eighty-five percent of Gen Zers cited one or more barriers to achieving financial success, with 53% saying the higher cost of living, which topped the list, according to a news release announcing the study’s findings.
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Among the lifestyle changes to save money, 43% of respondents said they are cooking at home more frequently rather than dining out; 40% said they are spending less on clothes; and 33% said they are limiting grocery purchases to essentials. Nearly all of those who adopted new spending habits said they plan to maintain them over the next year despite slowing inflation and decreasing price pressures.
The gap in spending between younger and older generations widened last year, according to the Bank of America Institute, with Gen Z credit and debit card spending declining by more than 2%, while the same spending increased by 2.5% among baby boomers and 5% among traditionalists between May 2022 and May 2023, according to the release.
“This younger generation has proven resilient and resourceful in managing their money during a challenging environment, and adapting their lifestyles as needed,” Holly O’Neill, president, retail banking at Bank of America, said in a statement. “We continue to provide a wealth of resources and the guidance they need as they work toward financial independence and on building wealth.”
Other survey findings include:
- More than half of respondents (56%) said they don’t have enough money saved to cover three months of expenses in the event of an emergency.
- Nearly 37% said they’ve experienced a financial setback over the past year – such as decreased savings or additional debt – causing 27% to borrow money from friends or family.
- While 52% of Gen Zers said they feel confident they’re on track to meet their financial goals and 48% said they are fully or mostly financially independent – 69% said they are confident in their ability to manage day-to-day expenses, 70% said they can manage their budget and 67% said they can manage their credit – many lack confidence around complex financial planning topics, with 45% saying they feel equipped to save for retirement and only 29% saying they’re equipped to invest in the stock market.
- While Gen Z women continue to save more than Gen Z men, only 11% of women said they are investing, compared with 18% of men, and 40% of women said they feel equipped to save for retirement, compared with 51% of men.
- Just 24% of survey respondents said they feel confident the economy will improve over the year ahead, compared with 41% who said the same in 2021, and 32% said they feel confident the job market will improve, compared with 46% in 2021.
Looking ahead to 2024, 36% of Gen Zers said furthering their education was a top priority, while 31% said advancing their career or increasing their salary, and another 31% said getting a new job.
Thirty-three percent of respondents said they started a new job or took a new position this year, while 22% said they negotiated a raise and 14% said they applied for a job in a new field. For those who started a new job, 36% said they were motivated by higher salaries, 32% said better long-term prospects, and another 32% said they saw a new role as a step up.
The survey was conducted from Aug. 15-28 by Ipsos in both English and Spanish and is based on nationally representative probability samples of 1,156 general population adults (age 18 or older) and a partially overlapping sample of 1,167 Gen Z adults (age 18-26), including 122 Gen Z adults from a nonprobability sample.
