Gen Z and Financial Anxiety: Worries About the Future

What is Financial Anxiety?

Financial anxiety refers to the overwhelming worry and stress related to one’s finances. It can affect anyone, regardless of whether they are struggling financially or have a stable income. This anxiety typically arises from uncertainty about the future or the fear of encountering unexpected expenses.

Some signs of financial anxiety include:

1. Physical symptoms: Headaches or stomachaches when checking bank balances.
2. Avoidance: Leaving bills unopened for several days.
3. Difficulty making decisions: Overthinking every expense, even small ones.
4. Lack of work-life balance: Continuously working without breaks to maintain financial security.
5. Overly strict budgeting: Feeling frustrated when minor changes disrupt the financial plan.
6. Constant worry about money: Difficulty stopping thoughts about investments and market fluctuations.
7. Difficulty sleeping: Staying awake at night due to concerns about unexpected expenses or future savings.

Financial anxiety is often triggered by fears of uncertainty, such as worrying about not having enough money for future needs. Additional factors like job instability, debt, or an inability to save can intensify these feelings.

Why is Gen Z More Prone to Financial Anxiety?

Generation Z (Gen Z), born between the mid-1990s and early 2010s, faces unique financial challenges. They grew up during periods of economic instability, such as the 2008 global financial crisis, and continue to experience shifts in the job market. These experiences have left a lasting impact on their mental health, particularly in terms of financial anxiety.

According to a survey by Ernst & Young LLP (EY), more than half of Gen Z feel very or extremely anxious about their financial future. Only about 31% feel financially secure.

The Impact of Financial Anxiety on Gen Z’s Mental Health

Financial anxiety takes a significant toll on mental health, particularly for Gen Z. The pressure of navigating a fluctuating job market, managing student debt, and planning major life milestones—such as buying a home or starting a family—can be overwhelming. It’s no surprise that 46% of Gen Z now prioritize earning money, an increase from 32% in 2021.

Here are some ways financial anxiety impacts Gen Z:

• Excessive worry: Many continuously think about their financial future.
• Burnout: The prevalence of side hustles reflects their efforts to create financial stability. Approximately 56% of Gen Z engage in freelance work, and 39% juggle a primary job with side gigs.
• Mental health challenges: High levels of stress, insomnia, and financial anxiety have become common experiences.

How Gen Z Can Cope with Financial Anxiety

To address financial anxiety, Gen Z can consider the following steps:

1. Create a flexible budget: While budgeting is crucial, leaving room for unexpected expenses can help reduce stress.
2. Build an emergency fund: Allocating a portion of your income toward an emergency fund can ease concerns about unplanned expenses.
3. Improve financial literacy: Gaining a better understanding of how to manage money, save, and invest can make financial decisions easier and alleviate anxiety.
4. Seek professional help: Financial advisors can help create personalized financial plans, while therapists can offer techniques to manage anxiety.
5. Take breaks from worrying about money: Setting aside time to step away from financial concerns is essential for maintaining mental well-being.

Facing Financial Anxiety with Confidence

Gen Z is facing significant financial pressures, and their anxiety about the future is understandable. However, financial anxiety isn’t just a personal issue—it’s a widespread problem that affects many in this generation. With improved financial literacy, practical strategies, and a supportive environment, Gen Z can learn to manage financial worries and approach the future with greater confidence.

Sources:

1. Survey by Ernst & Young LLP (EY)
2. Twenge, Jean M. iGen: Why Today’s Super-Connected Kids Are Growing Up More Tolerant, Less Happy—and Completely Unprepared for Adulthood

Contributor:

Meiardhy Mujianto