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Gen Z is Tightening its Belt, with 73% Modifying Lifestyles Due to Inflation

BAC | October 13, 2023

BofA's 2023 Better Money Habits Survey Uncovers Changes in Younger Americans' Spending Priorities

CHARLOTTE, N.C., Oct. 13, 2023 /PRNewswire/ -- Today, 85% of Gen Zers cite one or more barriers to achieving financial success. Topping the list is the higher cost of living, cited by 53% of respondents to Bank of America's annual Better Money Habits survey (PDF). The new research provides timely insights into approaches this younger generation is taking to gain its financial footing in the current economic environment.

Over the past year, nearly three out of four (73%) Gen Zers say they've changed their spending habits due to increased prices. Their lifestyle changes have included cooking at home more frequently (43%) rather than dining out, spending less on clothes (40%) and limiting grocery purchases to the essentials (33%). And nearly all those who adopted these new spending habits plan to maintain them over the next year (90%, 79% and 80%, respectively) – even as inflation slows and price pressures decrease.

According to the Bank of America Institute, a significant gap opened in the last year between spending by younger and older generations. According to Bank of America data regarding credit and debit card spending per household, Gen Z spending declined by over 2% between May 2022 and May 2023, while spending increased by 2.5% (Boomers) and 5% (Traditionalists).

"This younger generation has proven resilient and resourceful in managing their money during a challenging environment, and adapting their lifestyles as needed," said Holly O'Neill, President, Retail Banking at Bank of America. "We continue to provide a wealth of resources and the guidance they need as they work toward financial independence and on building wealth."

Additional insights - Financial Health

Over the last year, nearly four in 10 Gen Z (37%) say they've experienced a financial setback – such as decreased savings or additional debt – causing 27% to borrow money from friends or family. The reliance on friends and family is likely due in part to the fact that more than half (56%) say they do not have enough saved to cover three months of expenses in the event of an emergency.
While just over half of Gen Z (52%) feel confident that they're on track to meet their financial goals, fewer than half (48%) are fully or even mostly financially independent.
However, Gen Z still feel able to handle everyday financial activities. The majority are confident in their ability to manage day-to-day expenses (69%), manage their budget (70%) and their credit (67%). However, they lack confidence around complex financial planning topics; fewer feel equipped to save for retirement (45%) or invest in the stock market (29%).
While Gen Z women continue to save more than Gen Z men, fewer Gen Z women are investing (11% vs. 18% of men) and feel equipped to save for retirement (40% vs. 51% of men).
Confidence in the economy among Gen Z is waning. Over the year ahead, just 24% feel confident the economy will improve, compared to 41% in 2021; and 32% feel confident the job market will improve, compared to 46% in 2021.

Top Priorities

Looking ahead to 2024, Gen Z's top priorities include furthering their education (36%), advancing their career or increasing their salary (31%), and getting a new job (31%).
This year, many Gen Z started a new job or took a new position (33%), negotiated a raise (22%), or applied for a job in a new field (14%).
For those that started a new job, they were motivated by higher salaries (36%), better long-term prospects (32%), and saw a new role as a step up (32%).

For more details, please see the full report (PDF).

Methodology
This survey was conducted Aug. 15 – 28, 2023 by Ipsos in both English and Spanish and is based on nationally representative probability samples of 1,156 general population adults (age 18 or older) and a partially overlapping sample of 1,167 Gen Z adults (age 18-26), including 122 Gen Z adults from a non-probability sample. This survey was conducted primarily using the Ipsos KnowledgePanel®, the largest and most well-established online probability-based panel that is representative of the adult US population. The margin of sampling error for the general population sample is +/- 3.6 percentage points at the 95 percent confidence level.

Better Money Habits®
At Bank of America, we're committed to helping people lead better financial lives by equipping them with the skills, knowledge and confidence to succeed. That's why we created Better Money Habits, a financial education platform of tools and information that helps people make sense of their money and take action to improve. As a cornerstone of Better Money Habits, we offer free financial education content and tools that break down financial topics in a way that's approachable and easy to understand. We continually look for ways to expand the reach of Better Money Habits and also offer Spanish language resources on the site.

Bank of America
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 68 million consumer and small business clients with approximately 3,900 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 57 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

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Reporters may contact:

Susan Atran, Bank of America
Phone: 1.646.599.3300
susan.atran@bofa.com