Rising living expenses prompt 72% of young adults to implements measures aimed at enhancing their financial well-being, as revealed by Bank of America's Better Money Habits Study.
In a recent survey conducted by Ipsos, Bank of America's financial education platform, Better Money Habits, revealed some insightful findings about the financial habits of Generation Z (Gen Z). The study, which was conducted online from April 4 - 25, 2025, found that 72% of Gen Z (ages 18-28) have actively taken steps in the past year to improve their financial health.
One of the key actions taken by Gen Z was putting money towards savings, with 51% focusing on this aspect. Another significant action was paying down debt, with 24% making a concerted effort in this area. Additionally, 64% of Gen Z focused on reducing expenses, notably cutting back on dining out (41%) and switching to more affordable grocery stores (23%).
Despite facing high living costs, over half of Gen Z surveyed cite the high cost of living as a barrier to financial success. This is reflected in the findings, with 59% admitting to overspending due to frequent small treats and 55% lacking an emergency fund covering three months of expenses.
The study also found that financial responsibility is an important attribute for nearly four out of five (78%) Gen Z when choosing a significant other. However, challenges remain, such as only a quarter of Gen Z contributing to a retirement account in the last year, and many struggling with income limitations. 29% want to save but don’t earn enough, and only 18% save a consistent percentage of their paycheck monthly.
The study also highlighted that Gen Z uses strategies like side hustles (18%) and budgeting apps to manage their finances but still perceive adulthood as more expensive than expected. The median deposit levels for Gen Z and Millennials remain higher than 2019 levels, suggesting they are not rapidly depleting savings despite economic pressures.
Interestingly, the proportion of Gen Z receiving parental financial support dropped from 46% to 39%, with fewer receiving amounts over $1,000 monthly (22% versus 32% last year). Common everyday expenses such as groceries (63%), rent and utilities (47%), and dining out (42%) are areas where spending has increased unexpectedly.
When stressed financially, 90% of Gen Z are likely to take action, such as checking their bank account balance, making a budget, getting ahead on paying bills, or other smart money moves. However, 33% of Gen Z are stressed about their finances, with economic instability being a root cause for 52% of them.
The study also noted that 66% of Gen Z don't feel pressured by their friends to spend beyond their means. Better Money Habits offers Spanish language resources on its site, making financial education more accessible to a wider audience.
[1] Data source: Bank of America's 2025 Better Money Habits financial education study. [2] Ipsos conducted the survey online from April 4 - 25, 2025. [3] The margin of sampling error for the general population sample is +/- 3.1 percentage points and for the general population Gen Z sample is +/- 3.5 percentage points at the 95 percent confidence level. [4] Additional supporting details are available in the original study.
- Gen Z has demonstrated a commitment to improving their financial health, with 72% taking active steps in the past year.
- Saving is a primary focus for Gen Z, with 51% putting money towards this aspect.
- Debt management is another significant area of focus for Gen Z, with 24% making a concerted effort.
- Reducing expenses is an important part of Gen Z's financial strategy, with 64% focusing on this.
- High living costs are a barrier to financial success for over half of Gen Z, with 59% admitting to overspending on small treats.
- A significant number of Gen Z lack an emergency fund covering three months of expenses.
- Financial responsibility is a key consideration when choosing a significant other for 78% of Gen Z.
- Despite efforts to save, many Gen Z struggle with income limitations, with 29% wanting to save but not earning enough.
- Side hustles and budgeting apps are strategies used by Gen Z to manage their finances.
- Despite economic pressures, the median deposit levels for Gen Z remain higher than 2019 levels, suggesting they are not rapidly depleting savings.
- The proportion of Gen Z receiving parental financial support has decreased from 46% to 39%.
- Common everyday expenses such as groceries, rent and utilities, and dining out have seen unexpected increases in spending.
- When financially stressed, 90% of Gen Z are likely to take action, such as checking their bank account balance or making a budget.
- 33% of Gen Z are stressed about their finances, with economic instability being a root cause for 52% of them.
- 66% of Gen Z don't feel pressured by their friends to spend beyond their means.
- Financial education is made more accessible to a wider audience through Spanish language resources on Better Money Habits' site.
- The study found that adulthood is more expensive than expected for Gen Z, even as they implement strategies for savings, debt management, and budgeting. Furthermore, they face challenges such as income limitations and a high cost of living, and many struggle with maintaining consistent savings. Additionally, they are affected by various external factors such as war and conflicts, policy and legislation changes, car accidents, fires, crime and justice issues, online education, and general news, which can impact their personal finance and wealth management, as well as their personal growth, education and self-development, mindfulness, productivity, and goal-setting.
