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20 GEN Z: ECONOMIC STATE MAKING IT HARDER TO SAVE Like most Americans, Gen Z is looking to establish its financial footing amid record-high mortgage rates and nationwide inflation, as the economic environment poses new challenges in achieving its financial goals. is is accord- ing to new research published by Bank of America's Better Money Habits, exploring this generation's (ages 18 to 25) distinct approach to money—including their financial priorities, behaviors, and challenges. With Gen Z being far more diverse than previous generations, new research also examines ways in which race, ethnicity, and gender may influence their financial priorities and challenges. According to an estimated 73% of Gen Z, the current economic environment has made it more challenging to save. ey reported feeling that inflation has made it harder to save for financial goals (59%) and paying down debt (43%) has created more financial stress (56%) within their lives. Some 40% also said surging rents or home prices have made it challenging to af- ford day-to-day necessities. According to e Bank of America Institute, younger consum- ers are getting squeezed the most by higher rent inflation, with median rent payments up 16% year over year in July for Gen Z, com- pared to just 3% for baby boomers. Currently, 75% of Gen Z are taking or considering steps to earn additional income including: » Changing jobs (34%) » Turning a passion into a source of income (31%) » Taking on a second job (26%) » Taking on a job they don't like (23%) When it comes to success at work and in life, Gen Z is driven by the desire to achieve financial peace of mind (74%) and to com- fortably afford the things they want. "Gen Z is ambitious and enterprising, and taking positive actions as they join the workforce and make some of their first finan- cial and career-driven decisions," said Chris- tine Channels, Head of Community Banking and Consumer Governance at Bank of America. "Current economic and inflationary headwinds have created added challenges for many. rough our Better Money Habits platform, we're connecting these young adults to a wide range of resources and guidance designed to give them the skills, knowledge, and confidence to succeed financially." Highlights: » Gen Z's top three priorities for the year ahead include furthering their education (40%), advancing their career/salary (32%), and getting a new job (31%). ese priorities are followed closely by saving for retirement (25%), traveling (24%), buying a car (22%), and building good credit (20%). » Gen Z is more likely than other generations to cite the desire to comfortably afford material items (45%) as a motivator to achieving financial success (vs. 34% of millennials, 30% of Gen X, and 30% of baby boomers). » More than half (56%) of Gen Z say discipline is a key trait to achieving financial success, with other important traits and characteristics being financial savvy (37%), organization (35%), motivation (34%), self-awareness (29%), frugality (20%) and confidence (20%). » Today, two-thirds (66%) are actively saving for financial goals and, despite the current environment, 58% are optimistic about their financial futures. Much of Gen Z has the financial basics down, though they struggle with more com- plex topics such as investing and debt. » Gen Z feels equipped to handle basic financial tasks, including budgeting (71%), managing day-to-day expenses (70%), and building/managing credit (65%). However, preparedness levels decrease significantly when it comes to the future and more complex topics, including building an emergency fund (54%), saving for retirement (43%), and investing (29%). » Nearly 40% have no investments, and of those, the top reasons for not investing include having no additional funds to spare (44%), not knowing where to start (31%), and feeling investing is too risky (23%). e federal student loan freeze has brought some relief. » Nearly half (47%) of Gen Z already carry some form of debt, including through credit cards and student loans. » ey have found that the federal student loan freeze has brought them some relief. Among those with student loans, 41% say the freeze allowed them to maintain their current standard of living, 23% say it allowed them to contribute more to their savings, and 21% say they've been able to continue paying down their loan without collecting interest. Demographic Spotlights Research also explored how race and gender may influence financial priorities and challenges, including the racial wealth gap. Re- flecting on the last five years, about two-in-five Black/African American (41%) and Hispanic (42%) Gen Zers say some or significant progress has been made to close the racial wealth gap, while others in these groups say no progress has been made (both 30%). Looking to the next five years, about half of Black/African American (47%) and Hispanic (54%) Gen Zers believe some or significant progress will be made to close the gap, while others say no progress will be made (28% and 24%, respectively). Addition- al findings include: Black/African American Gen Z is paving the way toward financial independence and embracing a hustle culture, though barriers persist around debt and saving. » Sixty percent of Black/African American Gen Z identify as mostly or fully financially independent—more so than their non-Black/ African American peers (45%). » Eighty percent are currently/considering taking routes to earn supplemental income— more so than their non-Black/African American peers—including taking on a second job (35% vs. 25%). » ey are three times as likely to prioritize starting or growing a business in the year ahead compared to non-Black/African Journal