Study Shows Gen Z Saving Harder Even as Costs Rise

Along with home ownership, a longstanding pillar of the American dream is that each generation should outshine the previous one in economic well-being .

Young adults in the cohort known as Generation Z, now aged roughly 18 to 28, show signs of building the financial habits to make that happen. But there are several conditions.

PYMNTS Intelligence’s September Paycheck-to-Paycheck Report, “ Why Paycheck-to-Paycheck Consumers Can’t Weather a $2,000 Shock ,” found that the 43 million Americans who are Gen Z working adults saved 29.8% of their income from February to August. That’s a bigger portion than all other age groups. [1]

The dollar amount that they’re stockpiling is smaller in absolute terms compared to older individuals. Gen Zers, born in 1997 or later, are early in their earning careers, making comparatively less and/or perhaps living at home to save on housing costs. As they grow older and transition into lifecycle stages tied to homebuying and paying for their children’s education, aspects of the savings and spending habits they’re exhibiting now may carry over to their retirement planning and future consumption.

Gen Zers and other young Americans may already be on track to outstrip their parents, even amid higher student debt loads, rising property prices and inflation. By the end of 2024, young adults owned on average $1.23 for every $1 of wealth possessed by Generation X at the same age, according to the Federal Reserve Bank of St Louis . They also owned $1.35 for every $1 of wealth owned by baby boomers at the same age.

In a 2022 survey cited in a working paper last year, the Federal Reserve found that 51% of Gen Z adults (and half of millennial adults) said they thought they were doing better financially than their parents at the same age. The rates were slightly higher for Gen X adults (53%) and baby boomers (56%). The working paper also found that each of the past four generations of Americans was better off than the previous one, and that higher educational costs incurred by younger generations were “far outweighed by their lifetime income gains.”

Another positive signal comes from a Federal Reserve Bank of Dallas study of credit card use by Texas-based Gen Zers. It found that Gen Xers and millennials who used their cards like Gen Zers in their early 20s had lower delinquency rates and higher average credit scores by the time they were in their 30s. The study called it a “hopeful” sign for Gen Z’s financial future.

Save Nation

With nearly 4 in 10 consumers in the United States aged 25 to 28 holding a bachelor’s degree , Gen Z is one of the most educated cohorts in American history. Gen Zers have surpassed baby boomers in the U.S. workforce , making their financial habits and consumption patterns particularly important to the national economy.

Having readily available cash is now a prerequisite for amassing money for future investments and core asset purchases, like a home.

“The root of long-term financial security lies in short-term financial stability ,” grounded in careful spending that keeps expenses below income and low or no debt, along with access to workplace retirement plans, according to the Aspen Institute .

Gen Z’s participation rate in employer-sponsored 401(k) plans is more than twice as high as that of similarly aged employees in 2006, likely due to a federal rule on automatic enrollment that went into force in late 2022, according to retirement giant Vanguard .

Gen Zers have an average of $5,948 of readily available cash, meaning dollars in the bank or at home, the PYMNTS Intelligence study found. That’s 44% less than millennials ($8,594) and 57% less than Gen X ($9,313). Entry-level jobs pay less, leaving less money to save, but Gen Z likely doesn’t have to cope with a costly roof repair.

Those readily available cash figures are averages across age groups, meaning not everybody has those exact cash cushions. For many consumers, the cushions are thinly tufted.

Nearly half of all consumers surveyed in the PYMNTS Intelligence report aren’t confident they could cover an unexpected $2,000 shock within 30 days. Even among those who have savings on hand, 40% are very or extremely concerned about the damage a $2,000 expense would do to their existing cushion. A Gen Zer with a junior marketing job in Brooklyn will feel that pinch harder than one in Tulsa. Nearly 70% of Gen Z adults (and 64% of millennials) say rising prices are their biggest day-to-day challenge, compared with 39% of baby boomers.

The headwind for Gen Z is that life keeps getting more expensive, especially for the largest expenses such as housing, insurance, car payments and utilities. The increases hit low-earning households, including Gen Zers early in their professional careers, the most, a March study by Bank of America Institute found. Gen Zers’ relatively low readily available cash cushion may place them in the category of struggling households that can mostly only spend, not save, for the long term.

Gen Z is battling economic forces that keep their cash on hand thin. However, they’re also putting in the biggest pocketbook effort, dedicating the largest percentage of their paycheck to savings compared to baby boomers, Gen X, bridge millennials and millennials. The nightmare of rising costs is real, but so is the effort to capture a piece of the American dream.

Read more:

Gen Z Isn’t Different. They’re Digital by Default

Gen Z Isn’t Broke. They’re Smarter With Money Than You Think

The Five Rules of Engagement for Gen Z Spending and Payments

[1] PYMNTS Intelligence uses the following birth dates and approximate age ranges in 2025 for generational cohorts: baby boomers, born in 1964 or earlier and now aged 61 or older; Generation X, born between 1965 and 1980 and now aged 45-60; millennials, born between 1981 and 1996 and now aged 28-44; bridge millennials, born between 1978 and 1988 and now aged 37-47; zillennials, born between 1991 and 1999 and now aged 25-34; and Generation Z, born in 1997 or later and now aged 28 or younger.