Gen Z debt outpaces Millennial levels at same age

Ted Rossman of Money Management International reported that Gen Z members hold more debt than Millennials did at the same age. This comparison holds true even after adjusting figures for inflation, according to data from TransUnion.

The credit counseling agency has tracked this trend over the past year. Demand from Gen Z clients rose by 35% during that period. Concurrently, the average debt loads for these individuals increased by approximately 12%. Rossman attributed these figures to the accumulation of student loans, elevated rent costs, and the widespread use of buy now, pay later financial plans.

These financial burdens have left many young adults operating on a paycheck-to-paycheck basis with minimal savings. Rossman described these as early career pressures. He noted that the years required to form households are particularly expensive. "You have student loans, you have high housing costs," he said. "Those household formation years are very expensive, so GenZer’s actually have more debt than Millennials did at the same age, even adjusted for inflation according to TransUnion."

Rossman advised young adults to focus on basic budgeting and monitor their spending through buy now, pay later services. While popular among people in their 20s, he emphasized that these plans represent debt. "It can work in your favor. Sometimes you can get a good deal, but just be mindful that it’s not a free lunch," he explained. He warned that even interest-free periods require scheduled payments and can lead to overspending if not managed carefully.

He also cautioned about the interest rates associated with these arrangements. Credit card debt often carries interest rates in the 20% range. For those who feel overwhelmed by their financial obligations, Rossman said asking for professional help remains an available option.