When it comes to saving, Gen Z asks: ‘What's the point?' That's dangerous, expert says
Nearly half (49%) of its adult members — the oldest of whom are in their late 20s — say planning for the future feels 'pointless,' according to a recent Credit Karma poll.
A freewheeling attitude toward summer spending has taken root among young adults who feel financial 'despair' and 'hopelessness,' said Courtney Alev, a consumer financial advocate at Credit Karma.
They think, 'What's the point when it comes to saving for the future?' Alev said.
That 'YOLO mindset' among Generation Z — the cohort born from roughly 1997 through 2012 — can be dangerous: If unchecked, it might lead young adults to rack up high-interest debt they can't easily repay, perhaps leading to delayed milestones like moving out of their parents' home or saving for retirement, Alev said.
But your late teens and early 20s is arguably the best time for young people to develop healthy financial habits: Starting to invest now, even a little bit, will yield ample benefits via decades of compound interest, experts said.
'There are a lot of financial implications in the long term if these young people aren't planning for their financial future and [are] spending willy-nilly however they want,' Alev said.
Why Gen Z feels disillusioned
That said, that many feel disillusioned is understandable in the current environment, experts said.
The labor market has been tough lately for new entrants and those looking to switch jobs, experts said.
The U.S. unemployment rate is relatively low, at 4.2%. However, it's much higher for Americans 22 to 27 years old: 5.8% for recent college grads and 6.9% for those without a bachelor's degree, according to Federal Reserve Bank of New York data as of March 2025.
Young adults are also saddled with debt concerns, experts said.
'They feel they don't have any money and many of them are in debt,' said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California. 'And they're wondering if the degree they have (or are working toward) will be of value if A.I. takes all their jobs anyway. So is it just pointless?'
About 50% of bachelor's degree recipients in the 2022-23 class graduated with student debt, with an average debt of $29,300, according to College Board.
The federal government restarted collections on student debt in default in May, after a five-year pause.
The Biden administration's efforts to forgive large swaths of student debt, including plans to help reduce monthly payments for struggling borrowers, were largely stymied in court.
'Some hoped some or more of it would be forgiven, and that didn't turn out to be the case,' said Sun, a member of CNBC's Financial Advisor Council.
Meanwhile, in a 2024 report, the New York Fed found credit card delinquency rates were rising faster for Gen Z than for other generations. About 15% had maxed out their cards, more than other cohorts, it said.
It's also 'never been easier to buy things,' with the rise of buy now, pay later lending, for example, Alev said.
BNPL has pushed the majority of Gen Z users — 77% — to say the service has encouraged them to spend more than they can afford, according to the Credit Karma survey. The firm polled 1,015 adults ages 18 and older, 182 of whom are from Gen Z.
These financial challenges compound an environment of general political and financial uncertainty, amid on-again-off-again tariff policy and its potential impact on inflation and the U.S. economy, for example, experts said.
'You start stacking all these things on top of each other and it can create a lack of optimism for young people looking to get started in their financial lives,' Alev said.
How to manage that financial malaise
Young adults should try to rewire their financial mindset, experts said.
'Most importantly, you don't want to bet against yourself,' Sun said.
'See it as an opportunity,' she added. 'If you're young and your expenses are low, this is the time to invest as much as you can right now.'
Time is working in their favor, due to the ability to compound investment growth over multiple decades, Alev said.
While investing might 'feel impossible,' every little bit helps, even if it's just investing $10 a month right now into a tax-advantaged retirement account like a Roth IRA or 401(k).
The latter is among the easiest ways to start, due to automatic payroll deduction and the possibility of earning a 'match' from your employer, which is 'probably the closest thing to free money any of us will get in our lifetime,' Alev said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Herald Scotland
an hour ago
- The Herald Scotland
'Big Beautiful Bill' summary shows the biggest changes for you
? Extension of the 2017 tax cuts: This is the biggest item, costing about $3.7 trillion over the next 10 years, according to the non-partisan Tax Foundation. That's money the federal government won't collect. ? Cuts to health care and food programs: These proposed reductions would save about $1.3 trillion, based on a June 17 report from the Congressional Budget Office. The winners (and losers): Who benefits the most in Trump's "big beautiful" tax bill Skip to: OTHER TAX CUTS, BENEFITS | MORE FUNDING | LESS FUNDING The Penn Wharton Budget Model forecasts that the lowest-income households will be left worse off because of cuts to Medicare and SNAP, formerly known as food stamps. Those Americans could lose $27,500 over a lifetime, while the highest-income households would gain more than $65,000. How people at every income level will fare: Unable to view our graphics? Click here to see them. Back to top In addition to extending the tax cuts from the 2017 tax bill, Americans who live in high-tax states such as California, New York and New Jersey will get a bigger income tax deduction for state and local taxes, known as SALT. That tax break will last only through 2028. In one of the most talked-about provisions and one of Trump's 2024 campaign promises, tips and overtime wages will no longer be taxed - sort of. The final version of the bill set limits on both. Some of the other tax reductions you can expect: Back to top Back to top Back to top How big is the bill for the tax bill? Depending on whom you ask on Capitol Hill, the cost of the bill could be as little as $440 billion, while other, more conventional estimates put the cost at nearly 10 times higher. As Senate Republicans pushed toward passage, they requested that the Joint Committee on Taxation omit the 2017 tax cuts in a new estimate. Without those portions, the bill's total cost falls to $441 billion. Senate Republicans argue that because the bill extends current tax law, those cuts shouldn't be counted. More traditional methods have pegged the cost around $2.7 trillion to $3.3 trillion. Back to top Contributing: Reuters
The Herald Scotland
an hour ago
- The Herald Scotland
Unusual Social Security Administration email touts Big, Beautiful Bill
Issuing an overtly political statement is unusual for the agency that oversees Social Security, which makes monthly payments to 73 million retirees, their survivors, and people with disabilities. "It's completely unprecedented," said Alex Lawson, executive director of Social Security Works, a left-leaning advocacy organization focused on retirement benefits. "It's an enormous breach of trust." Lawson contends that the email praising Trump's "Big, Beautiful Bill" violates the Hatch Act, a law against partisan political activity by federal government employees. The Social Security Administration did not immediately respond to inquiries seeking clarification. The White House referred USA TODAY's request to SSA. A tax cut for some seniors During his campaign, Trump promised to eliminate income taxes on Social Security benefits. Instead, the just-passed bill - which Trump will sign in the late afternoon on July 4 - creates a $6,000 federal income tax deduction for Americans 65 and older. Since Social Security benefits are often a large part of seniors' income, some portion of those benefits will now be untaxed for those who qualify for the deduction. "It reduces the amount of Social Security benefits subject to tax, but it's not just for Social Security," explains Garrett Watson, senior policy analyst at the Tax Foundation, a center-right think tank. "This is a historic step forward for America's seniors," said Social Security Commissioner Frank Bisignano, a former Wall Street executive appointed by Trump. "For nearly 90 years, Social Security has been a cornerstone of economic security for older Americans. By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump's promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they've earned." There are many Social Security recipients and seniors who won't get a tax cut, however. About 5% of retired Social Security beneficiaries are ages 62 to 64. There are also deceased workers' survivors and disabled workers who are younger than 65. Among those 65 and older, many have below the standard deduction of $14,600 per person or $29,200 per couple, so they already aren't paying income taxes anyway. At the other end of the spectrum, the deduction phases out for individuals making more than $75,000 or couples earning more than $250,000. Less benefit for those with lower incomes "Lower-income earners benefit less than middle and upper-middle income households," Watson said. On average, seniors in the bottom 20% income will save just 0.1% on their tax bill, according to the Tax Policy Foundation's analysis, about one-tenth of what those in the middle of the income distribution will save. "It's been marketed as tax relief for seniors, but a lot of seniors are going to be surprised when they find out it doesn't apply to them," Watson said. "I'm getting asked all the time by folks what this actually means for their tax situation." Social Security's long-term funding problem And while some will soon benefit form lower taxes, the lost tax revenue could trigger a future automatic benefit cut for all beneficiaries. That's because Social Security benefits aren't taxed like normal income. Instead of being used as general revenues, they go specifically into the trust funds that provide a backstop for Medicare and Social Security. The Social Security and Medicare Hospital Insurance trust funds were on track to be depleted by 2033, but now that date will be moved up to 2032, because the senior citizen tax deduction will lop an estimated $30 billion per year off the tax revenues those trust funds collect, according to the Committee for a Responsible Federal Budget. That, in turn, will trigger a future automatic benefit cut of 24% to all recipients, the centrist think tank projects. Those problems will only grow worse, Watson noted, if Congress renews, increases or makes permanent the senior tax deduction, when it expires in 2028. "It's a mixed bag for seniors, because some seniors will get some tax relief; the cost of that, though, is borne by the entire Social Security system," Lawson said. Email comes amid customer-service 'crisis' Critics are pouncing on the message arriving at a time when the Social Security Administration has been suffering from problems with customer service. The Trump administration has reduced the agency's staff and instituted new rules on identification for applicants, resulting in average wait times that have ballooned to 90 minutes. In June, the agency stopped making public real-time performance metrics about how long they will have to wait to reach a live person on the phone, and how long applications for new benefits take to be approved, USA TODAY reported on June 26. Multiple times, USA TODAY reporters called Social Security's 1-800 line they did not reach a live person before the line disconnected with no warning. Contributing: Sarah D. Wire
Daily Mail
11 hours ago
- Daily Mail
Simple money hack could save you hundreds of dollars over July 4th weekend
Gen Z-ers are spilling the tea on why purchasing items with cash helps save money. The simple money hack that's been sweeping social media for the last couple of years has been intensifying recently as young Americans grapple with rising costs. Australian influencer Matt Hey has been an advocate for paying with cash and keeping credit cards in wallets. He revealed in a TikTok video that using cash for recreational purposes makes him have a 'more conscious decision' into what he purchases. Before learning the trick, he would go over his $100 weekly budget because he did not think about what he was purchasing. Now, he pulls the money out of an ATM and typically has funds leftover to put into his savings. Another trick is to opt out of tap-to-pay, according to financial planner Nadia Vanderhall. By going cash-only, anyone celebrating the 4th of July will have a better chance of tracking their payments and eliminating the temptation for impulse buys. 'You decide how much you want to spend for the weekend, pull that amount in cash on Friday, and that's all you allow yourself to use through Sunday,' she told Bustle this week. Big spenders can try out the trick any time they'd like, all they need is a debit card and a way to withdraw money. Besides controlling overspending habits, it can also help save money on food or other things, which helps 'create real awareness.' Before giving it a go, cardholders are advised to check their bank balance, plan out the week ahead, and withdraw enough money to cover fees without going overboard. 'A lot of folks budget their fixed costs, but forget about the spontaneous "I deserve it" spending that tends to happen on the weekend,' Vanderhall explained. 'This approach helps you feel your spending in real time, keep your non-bill budget in check, and make more intentional choices — all without killing your fun.' Another money trend known as the 'treat yourself tax' can help Americans control spending as it requires matching the cost of impulse buys to a savings deposit. Americans can also turn to the '1 percent rule' to control over spending, and consider using the 'one-tenth rule' when purchasing a car. Hundreds of Reddit users have already said that they would choose cash over cards any time they entered a bar. Tap-to-pay using apps like Apple Pay and Google Pay is a common payment method for Gen Z 'I've never once opened a tab at a bar. It honestly seems like such a weird and unusual thing to do to me, paying every time you go to the bar just makes way more sense,' a Gen Z Reddit member wrote. 'This is why cash is king. Don't need to worry about leaving your card at the bar,' a bargoer responded. 'Packed college town bar/crowded bar mid bar hop? Pay every time,' a commenter admitted. 'In countries that aren't stupid, you pay for every drink as you get it and that's that,' another person wrote. Others believe cash-only payment methods at bars are 'unreasonable' and make it 'extremely difficult' for bartenders. 'It creates a huge amount of pointless work for servers and bartenders, with the exact same outcome for you,' a Reddit user insisted. 'It's also massively inconsiderate and entitled.' 'This is an a** move on the customer part. You keep it open and close when you leave,' another person wrote regarding bar tabs.
