Researchers found that Gen Z is more optimistic about debt relief than Millennials.
In a recent survey, a striking difference was revealed in the financial optimism of different generations. This is especially true when it came to the prospect of debt-free living. Talker Research conducted the study between January 15th to 20th. It surveyed 1,000 U.S. employed adults regarding their savings and debt outlook.
Respondents were asked: Will you be free of debt in your lifetime, to the best that your knowledge?
The Generational Divide on Debt-Free Aspires
These survey results reveal a wide divergence between perspectives. Gen Z respondents, born 1997-2006, expressed a confidence of 81% in their ability to achieve debt freedom. Only 66% of those aged 29-43 shared that sentiment. Generation Z was the most confident age group.
Some generations were less confident: only 33% of Silent Generation members (aged 80+), 55% of Generation Xers (aged 44-60), and 62% of Baby Boomers (ages 61-79) believed that they could be debt free.
What is the Millennial Malaise all about?
According to Israilov – a certified financial advisor and wealth manager with Israilov Financial – millennials are less optimistic because they have more experience navigating the financial challenges of life. One key challenge involves mortgage debt.
Israilov revealed that “many are tied” to their home due to the interest rate they locked in when they purchased it. They may be reluctant to sell or move due to their attractive interest rates. The 30-year-mortgage rates have grown significantly over the past five. The situation causes financial inertia and makes it difficult to tackle debt such as credit card or student loans.
Generation Z and Financial Freedom
On the other hand, Joe Camberato, CEO of NationalBusinessCapital.com and a personal finance expert, believes Gen Z has more avenues for achieving debt freedom. Gen Z is different in their approach to finances, he argues.
They are staying at home for longer and saving on their rent, as well as other expenses. Camberato explained that it gives them the breathing space to save more, invest and pay down debt quicker. They’re thinking longer-term, which Millennials haven’t had the opportunity to do. They can then focus on important financial strategies, such as early investment and aggressive debt repayment. This will lead to greater financial stability.
Gen Z are more confident about being free of debt, according to the survey. The optimism of Gen Z is due to the fact that they have more money to save and are able to use different payment methods. They are finding it harder to get out of debt than their older counterparts. It could be because of the early years that Millenials were starting out.