Staff Reporter

Financial experts are becoming increasingly alarmed by studies indicating that young adults in the United States are lagging in their savings efforts. This troubling trend has prompted various organizations to step in, promoting financial literacy and encouraging healthier saving habits among the younger generation.

A recent survey by Empower, a financial services firm, revealed that over 21% of Americans do not have emergency savings—crucial funds for unexpected expenses like medical bills or job loss.

The findings show that the median emergency savings for Americans sits at a mere $600, significantly below the recommended three to six months’ worth of expenses.

When examining savings across age groups, baby boomers (ages 61 to 79) and Gen Xers (ages 44 to 60) lead the way with median savings of $1,000 and $868, respectively. In contrast, millennials (ages 28 to 43) and Gen Zers (ages 13 to 28) are lagging behind, with median savings of $500 and $200.

A recent report points to high monthly expenses and economic challenges as major hurdles preventing Americans from saving effectively. Additionally, substantial credit card balances are making it difficult for many to set aside money for emergencies.

While a significant number of young adults are struggling to build emergency savings, many are also spending a large portion of their income on discretionary items.

A new study by Morning Consult reveals that a considerable percentage of Gen Z adults are leading the way in discretionary spending compared to other generations.

The study found that discretionary spending makes up 23% of expenses for Gen Z adults, with 61% admitting they often overspend—many even accruing debt from “feel-good” purchases.

Thomas Rudzewick, president of Maspeth Federal Savings in Queens, New York, notes that the rise of easy transaction apps complicates savings for young adults.

“The problem is that young people today have so many opportunities to spend money because their phone is the banking transaction center,” he explained. “The ease of digital transactions today isn’t giving young people the ability to save.”

A year-end 2023 poll by YouGov showed that more than 60% of Gen Z Americans and millennials either have no savings for retirement or have saved less than $5,000. Furthermore, 43% of adults expressed uncertainty about their retirement readiness.

“This mindset is preventing them from meeting future retirement needs. Parents should teach their kids smart financial habits they wish they had known earlier,” said William Hubbard, a chartered financial analyst and CEO of Cirrus Capital in Michigan.

Another significant obstacle for young adults is student debt, which can severely impact their ability to save for the future.

According to educationdata.org, last year, 13.1 million Gen Z individuals and 18.5 million millennials were carrying student loan debt. Generation X leads with the highest average student loan balance at $44,240, followed by millennials at $40,438 and Gen Z at $22,948.