Gen Z is earning more than previous generations at the same age, yet many feel financially stuck. Unlike their parents, who prioritized savings and investments, young professionals today find themselves dealing with rising expenses, easy credit traps, and social media-driven spending habits.

So, what’s going wrong? Let’s break it down.

The Debt Trap: Easy Credit, Hard Repayments

A decade ago, getting a credit card was a hassle, but today, BNPL (Buy Now, Pay Later) services like Fibe, ZestMoney and Simpl have made borrowing as easy as a few clicks. Add to that the rise in personal loans and student loans, and debt becomes a major burden before a stable income even kicks in.

Fact: A 2023 RBI report showed that personal loans grew by 23% YoY, with a significant chunk taken by young borrowers.

Many don’t fully understand interest rates, EMIs, or repayment cycles, leading to unnecessary financial stress.

Quick fix: Always check the total repayment amount, not just the monthly EMI.

Social Media & Influencer Culture: Spending for the ‘Gram

Instagram, YouTube, and TikTok (yes, via VPN for some) have redefined spending habits. The pressure to wear luxury brands, dine at expensive cafes, and travel to Bali for ‘content’ has led to FOMO-driven spending.

Fact: According to a 2023 Deloitte report, 72% of young consumers say social media influences their purchase decisions.

Many influencers get freebies or sponsorships for the same lifestyle their followers try to afford with credit cards.

Smart move: Follow finance influencers like CA Rachana Ranade or Pranjal Kamra, not just luxury bloggers.

Lifestyle Inflation: Earning More, Saving Less

A ₹10 lakh per annum salary sounds great—until rent, food delivery, OTT subscriptions, gym memberships, and weekend getaways eat into it. This is lifestyle inflation, where expenses rise along with income, leaving little for savings.

Fact: A 2023 BankBazaar survey found that 58% of Gen Z earners save less than 20% of their income.

The Fix: Use the 50/30/20 rule—50% for needs, 30% for wants, and 20% for savings/investments.

Housing Woes: The Dream of Owning a Home is Distant

Unlike their parents, who could buy homes in their late 20s, today’s young workforce faces sky-high real estate prices. The home price-to-income ratio has widened, making homeownership a distant goal.

Fact: In cities like Mumbai, Bengaluru, and Delhi, a 20% down payment alone can take over a decade to save.

With rent increasing every year, saving enough for a home seems unrealistic for many.

Smart strategy: Consider REITs (Real Estate Investment Trusts) to invest in real estate without needing crores.

Job-Hopping Culture: More Growth, Less Stability

Gen Z values flexibility, better pay, and work-life balance over traditional long-term job security. While job-hopping can lead to better salaries, it also means losing out on long-term benefits like provident fund (PF) growth, stock options, and gratuity.

Fact: A LinkedIn India survey found that 67% of Gen Z workers are open to switching jobs within two years.

Financial tip: Negotiate higher employer EPF contributions and invest in NPS (National Pension System) for long-term security.

How to Fix These Financial Struggles?

1. Learn Money Management – Follow finance experts on YouTube, read books like Rich Dad, Poor Dad, and use finance apps.

2. Think Before Swiping – Credit card rewards are great, but high interest rates aren’t. Pay in full to avoid debt traps.

3. Start Investing Early – SIPs in mutual funds, index funds, and stocks can build wealth over time.

4. Track Expenses – Use apps like Walnut, MoneyView, or CRED to manage spending.

5. Build an Emergency Fund – Aim for 6 months’ worth of expenses saved in a liquid fund or FD.

Final Thoughts: Can Gen Z Build Wealth?

Yes! While the challenges are real, financial discipline, smart investing, and avoiding unnecessary debt can lead to financial freedom faster than expected. The key is balancing lifestyle aspirations with long-term goals.

Start today, and your future self will thank you!

FAQs

1. Why is Gen Z struggling financially?

Easy credit, rising living costs, social media-driven spending, and job instability make financial security harder.

2. How can young professionals avoid debt?

Understand credit card interest rates, avoid impulsive BNPL purchases, and pay off dues in full each month.

3. What are the best investments for beginners?

Start with mutual funds (SIP), PPF, index funds, and NPS for long-term wealth growth.

4. Is job-hopping bad for financial growth?

Frequent job changes can hurt retirement savings (PF, gratuity). Negotiate better benefits, not just salary hikes.

5. How much should be saved every month?

Aim for at least 20-30% of income, split between emergency funds and investments.

Also Read: Why Is Gen Z So Poor?