Gen Z workers can’t cover a month’s expenses, but could leverage their big advantage over older counterparts

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Gen Z has had a tough go economically. Many graduated college when the U.S. was in the throes of the pandemic and unemployment was sky-high. They struggled to find work.

Then Gen Zers were faced with a period of rampant inflation as the economy improved. While inflation has eased, the cost of living is still high.

A March 2025 Bank of America report revealed that 52% of Gen Z employees aren’t making enough to live the life they want, and that inflation is one of their biggest financial challenges.

The report found that, on average, Gen Z workers spend nearly twice as much as they earn. They don’t have enough money saved to cover even one month’s expenses.

This puts an entire generation at increased risk of debt and vulnerability if they’re laid off.

The Bank of America report found that Gen Z’s per-household spending on both necessary and discretionary items has grown faster than the overall population.

For example, in the past year, their spending on entertainment and travel rose 25.5%. Experian reports that the average Gen Zer carries $3,456 in credit-card debt. Plus, only 20% of Gen Zers are saving for retirement, according to a 2024 Teachers Insurance and Annuity Association of America report.

Gen Zers are clearly trailing. While part of that can be attributed to lower wages, it may also be a byproduct of the way they prioritize discretionary purchases.

If you’re a Gen Zer without much in the way of savings, take heart. You’re young, meaning you have the advantage of time to build wealth and fund a comfortable retirement.

You just need to prioritize your finances. Here are some ways to do that.

Gen Z is technologically savvy, so budgeting apps that integrate your bank and credit card accounts are an easy way to track and categorize your spending.

This can make you more mindful of your spending habits, and help identify discretionary expenses that you can cut back on. If you don’t know where to get started, Monarch Money can help you track your investments, spending and budgeting while offering personalized advice so you can get a top-down perspective on your finances.

You can also feel confident about sharing your financial data with Monarch Money — the app is protected by Plaid for secure data integration and employs multi-factor authentication at login, so you can keep your accounts safe.

Download the app now for a seven-day free trial. After that, you can get 50% off your first year with the code MONARCHVIP.

Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead

Another way to secure your wealth is automating a monthly contribution to your savings account when your paycheck hits.

From here you can collect interest, or take a more active role in investing your savings. As always, a healthy mix is best. Try to have a cash cushion in case of an emergency while investing in stocks when you can.

The barrier of entry to investing is also much lower than you might think.

With a Wealthfront Automated Investing Account, you can start investing in the stock market with as little as $1.

Depending on your risk profile and tax bracket, Wealthfront will create a customized portfolio with low-cost index funds that combines up to 17 global asset classes. You can also opt for automated index investing — helping you build wealth without worrying about short-term market fluctuations.

Wealthfront automatically rebalances your portfolio, diversifies your deposits and can help reduce your tax liability by tax-loss harvesting. Even better, up to $500,000 of your deposits with Wealthfront Invest are protected by the Securities Investor Protection Corporation. This means that in the event of a brokerage failure your cash and securities are protected.

Get started today and snag a $50 deposit bonus when you open your first investing account and fund it with $500 or more.

Over time, small contributions can go a long way. For example, if you invest $200 a month in an IRA or a 401(k) over 40 years, you could retire with about $479,000 at a 7% return. That’s roughly 2.5 times as much as the typical older American has in their retirement nest egg.

If you’re looking for a more active retirement strategy, you could also look into developing your own portfolio of curated stocks. This is often best used as an extra strategy layered on top of your IRA or 401(k) to supercharge your retirement prospects.

Investing platforms like Robinhood, allow you to buy and sell stocks, ETFs and their options commission-free, track your portfolio in real time and get 24/7 access to customer service.

For those starting small, the app also lets you buy fractional shares for as little as $1, making it easy to build a diversified portfolio without breaking the bank.

While your investments are working in the background, make sure to see if your employer will match 401(k) contributions for an extra boost. Finally, whenever you get a raise try to apply it to your retirement savings. It won’t feel like you’re missing the extra money if you get used to not seeing it in your paycheck in the first place.

Investing doesn’t have to be complicated.

S&P 500 index funds are often a good bet, as they allow you to build an instantly diversified portfolio without having to do a ton of research. They also tend to be stable outside of economy-defining market shifts. But if you’re looking to hedge against an uncertain, tariff-ladden future, diversifying your portfolio with assets outside the S&P can be a solid bet.

One option is tapping into the real estate market with Arrived. Real estate tends to act as a hedge against market forces like inflation due to rental income generation, property value appreciation and rising material costs driving up prices.

Arrived’s platform allows you to invest in shares of rental homes and vacation rentals without taking on the responsibilities of property management or homeownership. This means no midnight maintenance calls over burst pipes, or winding eviction processes for bad-faith tenants.

With Arrived, you can browse a curated selection of homes, each vetted for their appreciation value and income potential. Once you find a property you like, you can choose the number of shares you want to buy and start investing in real estate with just $100.

If you need help charting a course to your retirement, consider talking to a financial planner. While you may think that getting advice on your finances is only for the wealthy, the right advisor can help you with budgeting, setting financial goals and finding ways to begin investing with your limited income.

To find the right advisor for you, consider using Advisor.com. Their online platform can connect you with a vetted financial advisor in minutes.

Simply answer a few quick questions about yourself and your finances, and the platform will match you with an experienced financial professional who knows how to help young professionals sort out their goals for their financial future.

And the best part? You can view the advisor’s profile, read past client reviews and schedule an initial consultation for free with no obligation to hire.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.