The kids are alright, but they’re worried: Gen Z is working harder and saving more than any other generation
Despite Thursday’s news of lower high inflation levels, experts and even business leaders remain concerned that the US could see some kind of recession next year. And a potential economic downturn is driving Generation Z into action.
About 78% of Generation Z adults (aged 18-24) say they are cutting back on their spending in preparation for a potentially worse US economy, according to the latest LinkedIn Workforce Confidence Index report of 11,032 US professionals during September. From 10 to 21 October 2022.
That’s a slightly higher rate than the 74% of millennials (ages 25-41) who tighten their belts similarly and much higher than older generations. Generation Z was also more likely to delay a big purchase for the time being and sell things they don’t need to have some extra cash on hand.
The younger generation in the workforce is also more likely to play a conservative role with their paychecks right now, as Generation Z is more likely to work longer hours or work harder. Nearly a third are also considering a second job or a more stable job in the face of possible recession layoffs.
View this interactive infographic on Fortune.com
Jovan Johnson, a certified financial planner and co-owner of Atlanta-based planning firm Peace of Wealth, says it’s no surprise that the threat of a recession spurs Generation Z to organize their financial lives. In fact, he was noticing this trend with potential clients.
“Generation Z will likely prepare for a potential recession because this will be the first recession they will experience as an adult in the workforce,” Johnson says. “Generation Z has a greater fear of stagnation because they haven’t experienced one person firsthand as an adult. They don’t know what to expect.”
And the outlook is not good, especially when the last two recessions – the rapid COVID-19 caused by a pandemic and the Great Recession caused by the housing crisis – weren’t exactly a diversified event. Johnson says Generation Z has “only heard bad or terrible things about recessions”. Older generations have a little more experience with recessions and ‘recession fear talk’.
It also doesn’t help that Generation Z is any less secure in both their finances and their careers at this point. About 35% of Gen Zers believe the economic downturn is the biggest threat to their job security, according to a recent Prudential Financial report. The Growing Generation Gap: Dividing Work and Money Expectations. And while many have recently changed jobs, nearly half (48%) of Generation Z workers don’t think their current salaries will be enough to meet their financial goals.
The concern about the recession’s impact on jobs is true, especially for younger workers. Generation Z employees will be most at risk if a recession occurs. “Most employers start laying off workers with new employees,” Johnson says.
Financially speaking, many Generation Z employees haven’t had time to build a health emergency fund or a cash pile to cover them during unemployment, Johnson says. Prudential found that 39% of Gen Zs reported no emergency savings, and nearly four in 10 say they barely make money and live from paycheck to paycheck. Only about 12% of Gen Zs say they currently don’t care about money.
The higher prices certainly don’t help. Nearly half (43%) of Generation Z and young Millennials (those between the ages of 18 and 34) say they have been unable to make at least one credit card payment due to a lack of funds due to recent inflation levels, according to a recent survey from the provider Pay on Demand DailyPay.
“Generation Z employees try to be proactive, just in case,” Johnson says. It’s probably a good motivation, one that older generations would make good to put into practice as well.
This story originally appeared on Fortune.com
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