25% of Gen Z Employees Are Risking Their Own Financial Future

One in four Gen Z employees face a precarious financial reality, risking their ability to build a secure future. Crushing student loan debt, stagnant wages, and lack of financial wellness leave them teetering on a tightrope. 

The 25% paints a sobering picture of a generation.¹ Young adults are saddled with debt, burdened by family obligations, and often lacking the crucial tools to navigate the complexities of personal finance.

Financial wellness impacts the overall economic well-being of our society. Let's explore the reasons behind this alarming trend and seek solutions for how employers can empower this generation of workers toward financial wellness.

The Scope of the Issue

A significant segment of the workforce carries the weight of student loan burdens, stagnant wages, and a lack of affordable housing. Unlike previous generations, Gen Z entered a landscape already tilted against them. 

Record-high student loan debts hang heavy, making homeownership and other milestones seem distant dreams. The rising cost of living adds another layer of stress, squeezing their budgets and limiting their ability to save. 

This is a collective challenge impacting the overall economic health and well-being of our society. As Gen Z represents a growing force in the workforce, their financial instability ripples outwards, affecting everyone. 

What's more concerning is that this demographic lacks the necessary financial wellness and resources to manage their unique challenges. It's time for employers to step in and provide holistic financial wellness programs to support their Gen Z employees.

Addressing this issue isn't just about helping young adults – it's about securing a brighter future for all.

Why Is This Happening? 6 Key Reasons

It's no surprise that Gen Z is facing a financial crisis. But what is the root cause of this phenomenon?

1. High student loans: With college costs soaring, it's no wonder that student loans are the most significant financial burden for Gen Z employees. The average student debt per borrower has reached a staggering amount of $37,090.² 

This means that many young employees are starting their careers with substantial debt, limiting their ability to save for retirement or other financial goals.

2. Stagnant wages: Despite being highly educated and tech-savvy, Gen Z is entering the workforce at a time when wages have remained stagnant compared to the rising cost of living. This disparity makes it difficult for them to keep up with expenses and save for their future.

3. Lack of financial literacy: While this may seem like a personal responsibility issue, the lack of financial education in schools leaves much of Gen Z with limited knowledge about budgeting, saving, and building credit. 

Combined with the burden of student loans and stagnant wages, this results in many young adults feeling overwhelmed and unsure about how to manage their finances effectively.

4. Lack of affordable living: The rising cost of living, particularly in urban areas where many Gen Z employees reside, has made it challenging to find affordable housing and other necessities. 

Not having a disposable income because of high living expenses can also make it difficult for Gen Z employees to save or invest in their future.

5. Unreliable benefits: In addition to these financial challenges, many Gen Z employees also need help with reliable benefits. As they navigate the gig economy and non-traditional work arrangements, they often need more access to employer-provided assistance.

This includes health insurance, retirement plans, and other essential benefits that can support their financial stability.

6. Intergenerational poverty: Finally, for many Gen Z employees, their financial struggles are not just limited to their own circumstances. They may also come from low-income households with a history of intergenerational poverty, making it harder for them to break the cycle without proper resources and support.

These are just some of the reasons why 25% of Gen Z employees are risking their own financial future. Given these challenges, it's no wonder that this generation is facing a unique set of financial stressors that can directly impact their overall well-being.

How Can Employers Help?

While Gen Z employees face a unique set of financial challenges, the solution isn't solely an individual burden. Employers also have a responsibility and an opportunity to play a vital role in bridging the gap towards financial empowerment for this generation. 

Here are some of the best financial wellness programs and best practices your company can facilitate:

Investing in Holistic Financial Wellness

It's time to move beyond simply offering basic benefits like retirement plans. Embrace a comprehensive approach to financial wellness, providing personalized financial wellness support and educational resources.

Partner with financial institutions to offer tailored guidance and utilize fintech solutions that seamlessly integrate with payroll systems, empowering employees to manage their finances effortlessly. 

Imagine workshops buzzing with energy as employees learn about budgeting, debt management, and investing basics, equipped with the knowledge they need to navigate the financial landscape.

Creating a Financially Supportive Culture

Financial stress shouldn't be a silent struggle. Employers can foster transparency by openly discussing salaries, benefits, and career advancement opportunities. It empowers employees to make informed financial decisions. 

Offering student loan repayment support directly addresses a major burden for many Gen Z employees, demonstrating a commitment to their well-being. 

By prioritizing work-life balance through things like flexible work arrangements and paid time off, companies allow employees to manage their finances effectively, reducing stress and fostering a culture of trust.

Building Confidence and Momentum

Financial responsibility deserves recognition. Acknowledge and reward employees who actively participate in financial wellness programs or demonstrate responsible financial management.

Encourage financial mentorship programs, pairing senior employees with younger colleagues to share valuable knowledge and guidance. Celebrate financial milestones like debt repayment or savings goals achieved, boosting morale and motivating others to embark on their own financial journeys.

Studies have shown that companies can transform themselves from mere employers into true partners in financial empowerment. 

This investment in their employees' well-being doesn't just benefit individuals; it leads to a more engaged, productive, and financially secure workforce, ultimately contributing to the company's long-term success.

Request a demo to learn how a personalized solution like Enrich can help.

1 - Employee Benefit News

2 - Federal Student Aid