Pandemic has ‘eaten’ the savings of Gen Z and millennials quickly
The problem is especially acute for young Americans, especially millennials and Gen Zs. They say the pandemic has ‘eaten up’ their savings.
During the pandemic, millennials, aged between 26 and 41, and members of Generation Z, aged between 18 and 25, are the most affected. According to the results of a Bankrate survey of 1,000 adults in the United States in January 2022, Millennials have a high rate of falling into credit card debt.
Nearly half of Gen Z respondents (about 46%) say their emergency savings accounts in 2022 are far less than they were at the start of the pandemic; and 43% of millennials say the same thing. The outcome is even worse for younger millennials, who are between the ages of 26 and 32, with 54% of them saying their emergency savings have dropped significantly. during the pandemic. To see the difference clearly, we can compare, only about 37% of Gen X and 27% of baby boomers (born 1946 – 1964) say their savings have decreased during the period. epidemic.
Speaking to CNBC Make It, Greg McBride, lead financial analyst at Bankrate.com said: “It’s a by-product of income disruption. It’s disproportionately affecting young workers during the pandemic, especially millennials.”
In fact, in 2020, the Economic Policy Institute found that Gen Z is the generation most likely to face underemployment or unemployment due to the Covid-19 pandemic. The Pew Research Center also identifies Americans between the ages of 18 and 29, including Gen Z and younger generations, as the group most likely to lose their jobs during the pandemic and possibly, They are also subject to a pay cut.
At the same time, for millennials, a drop in savings means an increase in credit card debt. According to Bankrate, 32% of millennials say they currently have much less money in their savings accounts than they have to pay off their credit card debt.
Meanwhile, Gen Z and Gen X bring more positive results. Through a Bankrate survey, we can see that only 23% of Gen Z and 24% of Gen X have debt that exceeds their savings.
Before the pandemic, millennials actually tended to save more and avoid debt better than older generations, because they lived and grew up at the time of the dotcom bust and financial crisis. 2008.
“However, periods of income disruption or total unemployment can quickly erode the money they save and lead to credit card debt that previously didn’t exist.”McBride said.
Bankrate found that the percentage of Americans who save more money than they owe on credit cards fell slightly, to 53% in January 2022 from 54% a year earlier. However, this is actually higher than it was before the pandemic, when only 44% of people said their savings were more than their credit card debt in 2019.
Besides, the US is also one of the countries where a lot of people don’t have any savings.
Bankrate recommends looking at your budget and finding somewhere to put a small amount of money, and start building an emergency fund.
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