The Economy Is Taking Its Toll On Gen Z — 73% Have Changed Their Spending Habits Because of Increased Prices

Inflation, inflation, inflation. It's everywhere — and it's hitting people of all ages and all backgrounds where it matters most: their bank accounts.

According to the U.S. Bureau of Labor Statistics, the current inflation rate is 3.2% for the 12 months leading up to February. That's an increase of 0.4% in February over the previous month.

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And that's just what you see on the surface. Dig a bit deeper with for a takeaway from the same press release:

"The index for shelter rose in February, as did the index for gasoline. Combined, these two indexes contributed over 60% of the monthly increase in the index for all items. The energy index rose 2.3% over the month, as all of its component indexes increased. The food index was unchanged in February, as was the food-at-home index. The food-away-from-home index rose 0.1% over the month."

You're probably wondering what this all means, right?

For the average, everyday consumer it means one thing: The cost of living is on the rise. Your money doesn't go as far as it used to. And with that, changes are necessary.

Bank of America Corp.'s annual Better Money Habit survey sheds more light on the severity of inflation, with an eye toward the impact on Gen Z.

To start, 53% of Gen Z respondents said that the biggest barrier to achieving financial success is a higher cost of living.

But there's more.

In the past year, 73% of Gen Zers have adjusted their spending habits in response to rising prices. 

These adjustments have led to a greater preference for home-cooked meals over dining out (43%), reduced expenditure on clothing (40%) and a focus on essential grocery items (33%). 

The survey also notes that the majority of those who have embraced these new spending habits intend to continue them in the coming year — 90% for cooking at home, 79% for spending less on clothes and 80% for buying only essential groceries. They plan to do this even as inflation (hopefully) eases.

On the plus side, the younger generation appears to be ready for the challenge. 

"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 of retail banking at Bank of America. 

The economy is taking its toll on Gen Z, but they're making changes to combat these challenges. It's their hope — among everyone else — that inflation continues to decline as 2024 wears on.

As a Gen Zer, you could benefit by consulting a financial adviser. A professional can answer your questions and help you save for the future, even if the cost of living is increasing.

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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.

Chris Bibey has written about personal finance and investment for the past 15 years in various publications and for various financial companies. He is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Bibey believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.