The Burden of Debt on Young Shoulders

Generation Z, those born between 1997 and 2012, are stepping into adulthood under a mountain of debt like no other generation before them. According to a survey by Talker Research for Newsweek, Gen Z carries an average personal debt of $94,101, far surpassing the figures for millennials and Gen X. More than just numbers, this financial weight casts a long shadow over their everyday lives, with over half reporting that debt is a constant worry.

A Global Escape Route?

In pursuit of a more affordable lifestyle, some members of Gen Z are packing their bags. The 2024 Expat Report reveals that 45 percent of Gen Z expats left the U.S. seeking lower living costs. This movement underscores the tangible effects financial stress has on life decisions for the younger generation.

The Causes Behind the Crisis

Kristy Kim, CEO of TomoCredit, explains that Gen Z’s financial predicament stems from several factors: notably, rising student loan obligations, the relentless rise in living costs, and inflation. These burdens, combined with a lack of financial literacy, have many young adults turning to credit cards to make ends meet, leading to a vicious cycle of growing debts.

The Ripple Effects on the Economy

Kim further warns of the broader implications: “Rising debt at a young age can trap individuals in cycles of high-interest payments, delaying significant milestones such as homeownership and retirement.” Moreover, the escalation of consumer debt poses a risk not only to personal financial stability but also to the broader economy, increasing the potential for defaults that could impact financial institutions.

Seeking Solutions and Finding Hope

Despite the bleak outlook, there is hope. Kim advises those entangled in debt to adopt budget strategies that prioritize essentials while cutting unnecessary costs. Additionally, she suggests exploring side-hustles for extra income. Debt repayment strategies like the avalanche or snowball methods can help manage and reduce debt effectively. According to Newsweek, implementing strategic financial education and responsible lending practices is crucial to prevent this dilemma from spiraling into a deeper economic issue.

Looking Ahead: A Call for Action

With 69 percent of Gen Z adults citing inflation and the cost of living as their top concerns, there is a pressing need for comprehensive solutions. By fostering financial literacy and adapting policies to curb living costs, society can help mitigate this pressing issue for the current generation and those to come.