Generation Z is facing financial struggles that are causing a ripple effect on their parents’ retirement plans. With the increasing cost of education, housing, and healthcare, it is no wonder why so many young adults are struggling to make ends meet. But why is this happening, and what can Gen Z (and their parents) do about it?

The economic factors affecting Gen Z

Generation Z isn’t suffering as much as their Millennial siblings, but that doesn’t mean they’re thriving either. With a constant threat of economic recession, a volatile job market, rocketing real estate prices, and crippling student loan debt, it’s not a surprise they can’t seem to get ahead.

The news isn’t all bad, though, as Gen Z has learned a thing or two about debt management. Gen Z is less likely to carry interest-bearing credit card debt, avoid credit altogether, or actively consolidating credit card debt with 0% APR credit cards. They’re also less likely to use predatory payday loan companies or engage in risky financial behaviors.

Gen Z’s financial situation affects Gen X’s chances for retirement

But despite their best efforts, many Gen Z members are still struggling to get by and are turning more toward their parents’ financial stability for help. A recent study by GoBankingRates found that 67% of Gen Z-ers get some form of financial support from their parents.

Generation X is overwhelmingly the generation supporting Z-ers and dealing with the economic impact their children are facing, too. Instead of looking toward retirement, many X-ers opt to stay in the job market to help support their children. Some are even going further into debt, pushing the goal of retirement further down the line. Twenty-six percent of those surveyed by the National Endowment for Financial Education (NEFE) mentioned they had taken on some form of debt to help support their adult children.

Whether it’s to help with a down payment on an exorbitant mortgage, tapping into their savings to subsidize student loan payments, or holding off on downsizing their home while their adult children stick to their childhood bedrooms, the ripple effect is two-fold. In fact, a recent survey by Credello found that 42% of parents that helped pay their children’s student loans or funded their tuition either partially or completely made saving difficult, 51% said it decreased their disposable income, and 38% said it increased their stress levels.

Check out our infographic on the impact Gen Zers living with their parents is taking on their parents’ financial health.

Gen X and Baby Boomers staying in the job market to support their children may be doing double damage, however unwilling it may be. By staying in their current careers, there’s one less position that can be filled by someone younger and less experienced, and this could make it even harder for Gen Z to land a job. Additionally, delaying retirement means that older generations are missing out on the opportunity to enjoy their golden years while they’re still healthy and able.

Steps Gen Z can take to become more financially independent

So what can Gen Z do to improve their financial situation? First, they should focus on building an emergency fund, even if it’s just a tiny amount. This can help them avoid going into debt when unexpected expenses arise. They should also look into reducing their monthly expenses, such as cutting back on subscriptions or finding a roommate to split rent costs.

Finally, consolidating credit card debt with a 0% APR credit card can be smart as long as they have a plan to pay off the debt before the promotional period ends. Online debt consolidation calculators are beneficial as they’ll show you a realistic timeline for when you’ll be debt-free and what steps you can consider taking to make it happen. By taking steps to improve their financial situation now, Gen Z can help ensure a more stable future for themselves and their parents.

Bottom line

Gen Z may be struggling, but they’re not alone. The economic pinch is being felt across multiple generations, and the damage is real. However, there’s still hope for everyone to weather the storm if they take intentional steps to stay out of debt and use solid budgeting methods to grow their nest eggs. If you or your child are suffering financially, the worst thing you can do is wait and see what happens. Sit down together and plan how you’ll work together to ensure you’re both financially stable as soon as possible.