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A paper by Northwestern University and University of Chicago researchers concluded that Gen Z “are spending more of their earnings than they are saving, they’re working less, and they’re making risky investments.” 46% of Gen Z respondents agreed with this statement: “No matter how hard I work, I will never be able to afford a home I really love.”
The emphasis is mine and I think that’s important. One of the challenges we face in life is “unrealistic expectations.” In the current market, it may be necessary to make compromises. This is particularly so because many young people carry student loans, credit card debt and an automobile loan. Add the cost of renting and there may be little or nothing available to accrue a down payment.
Northwestern’s Seung Hyeong Lee and Chicago’s Younggeun Yoo Gen attribute Z’s withdrawal from buying a home because they are spending more money than they’re saving. This phenomenon is called doomspending. The authors point out that “renters give up on home purchases and instead use their savings to increase consumption.”
One study showed that nearly half of Gen Zers don’t have an emergency fund. A Bankrate survey also showed as many as 27% of Gen Z carry more debt than they do savings.
The researchers stated that Gen Z takes on risky investments, like buying cryptocurrencies. The researchers also stated that when buying a home for a Gen Zer seems unaffordable, they also increase their leisure spending.
Contrast this to Midwestern Millionaire traits.
That is not a good sign for Gen Z. My take, is they need discipline, and if loans or not, they need to think about retirement from DAY 1. They need to save some amount, even if it is small. Spending too much will get them in trouble, if not during their working years, then in their retirement years.
“No matter how hard I work, I will never be able to afford a home I really love.”
Just wait’ll they find out they’re not all going to get a trophy for doing a half-a**ed job at work…
Mass affluence and constant affirmations have led to high expectations, and I see many young people expecting to start out their adult lives living at the same level they left behind when they moved out of their parents’ quarters.
It’s a rude awakening to find out that for many, if not most, real life don’t always turn out that way.
I can remember being in a similar situation in the early 1980s. I was on the 8-year plan to finish college, because I got started just when tuition was skyrocketing at 15% per year, and I was living in my own tiny apartment working as a research technician. Buying a house was, for all practical purposes, totally out of reach and mortgage rates were whole number multiples of what today’s rates are. (It also didn’t help being the tail end of the Baby Boomers – born 1961) I didn’t buy my first house until I was almost 50 years old, but we paid cash on the barrel head, because I didn’t like the mortgage rate that we were being offered on a loan.
We were buying what would qualify as a starter house, because I was living & working overseas in the oil business and our eldest needed some place to lay his head when the dorms closed during university vacation periods.
My point? Yeah, it’s tough nowadays, but it was no walk in park for me, either. Unless your last name is Vanderbilt or Rockefeller (i.e., you come from moneyed parentage), success in life requires strong character to make the hard choices.
Yeah, I remember those mortgage rates.