Gen Z Americans don’t have enough saved to cover a single month of spending

Americans born after 1995 were spending double what they had in savings in February, one analysis showed.

Mar 14, 2025 - 20:31
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Gen Z Americans don’t have enough saved to cover a single month of spending

Younger Americans don’t have enough saved to cover a single month of spending, showcasing their vulnerability should the economy head into a downturn.

Members of the Gen Z generation — people born after 1995 — were spending twice the amount they had in savings on average in February, according to Bank of America Institute analysis of internal account and card data released Friday. The ratio has increased in the past two years, and is much higher than for other generations.

In part that’s because Gen Z consumers, many of whom still hold entry-level positions and make less than their older peers, tend to spend a bigger share of their incomes on necessities including rent and utilities. But they’re also more likely to shell out on discretionary categories like travel and entertainment. Spending in non-essentials among that cohort is up more than 25% from a year ago — substantially above the overall rate.

While the report noted that Gen Z workers are still garnering robust pay gains compared to older groups, it showcases a point of vulnerability as households’ views of the economy dim.

After years of stubborn inflation, higher borrowing costs and waning pandemic savings, views of their current financial situation have sharply declined this year. Among all US households, expectations for finances a year from now have dropped to an all-time low, according to a University of Michigan report out Friday.

Career concerns

Economists and policymakers are paying close attention to how this growing pessimism will impact consumption — the main engine of the US economy. Americans took a breather on spending at the start of the year, and some retailers are already warning of weaker demand ahead.

The Bank of America report also pointed to a worsening labor market for younger Americans. The number of Gen Z households receiving unemployment benefits rose by nearly a third in the past year — the most of any generation. It also noted that, with underemployment on the rise, that could have long-term career effects for that cohort.

This story was originally featured on Fortune.com