For years, we’ve been hearing about broke Millennials. There’s been a lot of controversy about the reasons. Some say Millennials can’t get ahead because of student loan debt, and have been condemned to living at home, delaying home purchases, and even pushing back marriage and children in service of their debt. Others paint them as a generation of slackers, too content to work part-time jobs in coffee shops and pursue vague dreams from their childhood bedrooms. And, of course, there are those who point to entirely different metrics and say that Millennials aren’t as a generation struggling financially – – they just have different priorities than older generations.
Undoubtedly, a certain amount of the condemnation they’ve faced has been a function of the age-old tradition of the older generation criticizing the younger. But, Millennials are no longer the new kids on the block. The oldest among them are turning 40 this year, and they’re outnumbered by the next generation.
Generation Z has so far received less attention than Millennials, likely because many of its members are still children. That means that most of them have not yet faced decisions about taking out educational loans, what to do for a living, when and whether to buy homes, or how to manage credit. There hasn’t been a lot of data about their priorities and behaviors, and until recently they haven’t played a significant role in the U.S. economy.
However, Gen Z encompasses those born between the mid-1990s and about 2012. That means a significant number of Gen Zers are now aged 18 to 25. And, given the size of the generation, that means they are beginning to play a significant role in the economy. According to a report from credit reporting agency TransUnion, Gen Zers aged 18 and older currently make up 8% of the U.S. population. In Los Angeles County, members of Gen Z make up about 10.6% of the adult population, with a significant increase each year as a fresh crop reaches the age of 18.
Financial Goals in Generation Z
According to the same TransUnion report, young adults in Generation Z are more likely than their Millennial counterparts to aspire to high paying jobs and accumulating wealth. They are also more likely to want to purchase homes, and to have children. 50% listed having more money as one of the top three changes that would improve their lives.
One explanation that has been suggested for the shift toward a greater interest in stability and financial security among this generation is that many who are now young adults were in their teens and conscious of the struggles their parents and other adults in their lives faced during the Great Recession.
Gen Z and Credit
TransUnion reports that about 66% of Generation Zers in the United States are “credit active”. That percentage is higher than any other country the study looked at, although Canada is close, at 63%.
Among those in the U.S. who are credit active, half have at least one credit card. 39% have student loans, and 25% have automobile loans. A separate study from Northwestern Mutual put average debt for this generation at $14,700. That’s lower than the average for any other generation. However, since those in Generation Z have only obtained access to credit in the last zero to seven years, they have had less time to accumulate debt, and generally have lower credit limits or more limited access to credit.
The TransUnion report showed that about half of the members of Generation Z who are credit active have credit scores in the prime or above tiers. And, their median credit card balance is just $606. But, other indicators say this generation is struggling. The most recent quarterly report on household credit released by the New York Federal Reserve shows that Generation Z and younger Millennials are roughly tied with those aged 70 and older for the lowest share of consumer debt in the United States. A higher percentage of their debt, on average, is student loan debt. And, they are less likely than other age groups to be transitioning into serious delinquency on their student loan debt. Still, they are more likely than any other age group to be transitioning into serious delinquency for consumer debt generally, for auto loans, and for credit card debt.
Managing Debt for Young Adults
Those members of Generation Z who are facing 90+ day delinquencies on their credit card debts, auto loans, and other debt may face different challenges and have different priorities than older Americans managing similar financial difficulties.
Talking to an attorney who is experienced in debt resolution can be the best first step for someone struggling with debt. Though many people who are overwhelmed by debt hope for the best, or attempt to solve the problem on their own for months or years before seeking advice from a bankruptcy attorney, understanding your options and the pros and cons of each early will allow you to make better, more educated, and more efficient decisions.
If your debt is out of control, you can schedule a consultation with one of the experienced bankruptcy lawyers at Borowitz & Clark right now. Just call 877-439-9717 or fill out the contact form on this site to get started. There is no obligation, and the consultation is absolutely free.