First, there was the Great Depression in the late 1920s and 1930s. Recently, we had the Great Recession of the late 2000s and early 2010s. Gen Z members, those born between 1997 and 2012, are confronting different financial challenges, ones that could last decades.
The economic forces acting against their long-term financial health make news headlines, but rarely together. Here’s what these young people, many of them in college or just starting their careers, face in South Florida:
Housing is too expensive: As news reports make clear, home ownership is all but impossible for early-career individuals. The median sales price of a single-family home in Miami-Dade County hit another record in May at $620,000. That number was slightly lower in Broward County, at $585,000.
If a young couple had a good credit rating and could scrap together a 10% downpayment, they would need to earn a combined $150,000 annually.
Renting is almost as financially painful, $3,700 a month in Miami for a two-bedroom apartment in early July, according to Rent.com. That figure was less in Fort Lauderdale, at $3,019.
Those numbers might be manageable if college graduates were not burdened with student loans. While the numbers vary, the most common estimate is that it will take 20 years for newly minted alums to get out of debt. Add to that car loan payments and the cost of raising a family, and Gen Z will have little money, if any, left over to save for retirement.
Will their wages rise over time? That’s the expectation. But will raises and promotions keep up with inflation? The nation recently experienced a surge in living costs to levels not seen since 1981.
It doesn’t help that Gen Z members are having a tougher time than other generations finding a job. While the national unemployment rate was 3.7% in May, it was a much higher 6.3% for those ages 20-24 and 10.9% for those 18 to 19.
What can Gen Z members do to overcome these headwinds? Many do not know the answer because they did not receive enough financial education in school. They are figuring it out for themselves and making mistakes with budgeting and saving. In our next blog post, Tropical Financial will help the newest generation navigate these difficult times.