A recent study reveals that Gen Z is facing significant financial challenges, marked by lower income and higher debt-to-income ratios compared to Millennials at a similar age.
Conducted by TransUnion, the study surveyed 614 Gen Z adults aged 22-24 and 623 Millennials who were in the same age group a decade ago. It found that Gen Z is grappling with a more daunting financial landscape than Millennials did years ago.
In the latter half of 2013, Millennials had an income of approximately $39,394, adjusted for inflation, which equates to $51,852 in today’s terms. Conversely, during 2023’s Q4, Gen Z adults earned $45,493.
The data further indicates that in 2013’s Q4, Millennials had a debt-to-income (DTI) ratio of 11.76 percent, whereas Gen Z adults faced a DTI ratio of 16.05 percent in 2023’s Q4.
After accounting for debt-to-income payments, Millennials’ income in 2013’s Q4 stood at $35,808, or $37,124 adjusted for inflation. In contrast, Gen Z adults’ post-DTI income in 2023’s Q4 was $40,200.
Regarding credit card balances, Millennials held an average balance of $1,708 in 2013, equivalent to $2,248 adjusted for inflation. Meanwhile, Gen Z adults carried credit card balances averaging $2,834 in 2023’s Q4.
Auto loan balances also paint a stark contrast. Millennials had an average auto loan balance of $14,468 in 2013, which inflated to $19,043. Conversely, Gen Z adults carried an average auto loan balance of $21,767 in 2023’s Q4.
These findings coincide with recent polls indicating that 48 percent of younger voters aged 18-34 express support for former President Donald J. Trump in the upcoming 2024 presidential election, compared to 52 percent favoring Joe Biden.
The Biden administration’s policies, characterized by high interest rates and increasing inflation, have exacerbated credit card debt among many Gen Z adults, further straining their financial circumstances.