When it comes to financial expectations, the divide between Gen Z and Baby Boomers couldn’t be starker. According to recent data, Gen Z believes you need a salary of $587,797 to feel financially comfortable, while Baby Boomers estimate that number to be just $99,874. These contrasting perspectives reflect vastly different economic landscapes, cultural influences, and lived experiences.
The Rising Cost of Living
In 2020 a household income of $59,000 was sufficient to afford a home, while the median household income was $66,000, leaving a modest financial cushion. Fast forward to 2024, and the financial picture has drastically shifted. A household now needs an income of $106,500 to afford a home, yet the median household income sits at just $81,000, leaving a significant gap.
For Gen Z, these realities have set a higher baseline for what “comfortable” means. Housing and healthcare costs have surged far beyond inflation, making the financial goals of prior generations seem outdated. Student loan debt is also putting a damper on their financial outlook as tuition costs have increased 303% since the days when most Boomers graduated college debt-free.
Financial Realities
The “American Dream” of a home, two cars, and two kids seems to be slipping farther out of reach for younger generations. Considering that the median monthly mortgage is $2,209, the average payment on a new car is $734, and monthly child care costs $1,284 on average, you would need to bring in $4,961 per month to cover those expenses. And that doesn’t take into account other essentials like groceries, utilities, and insurance, which quickly drive up that number.
Outlook on Wealth
Boomers’ financial outlook often revolves around stability and frugality, reflecting a time when saving was rewarded with higher interest rates and inflation was relatively controlled. Gen Z, on the other hand, prioritizes flexibility and experiences, often valuing side hustles and passive income streams. This reflects a shift from traditional employment to a more entrepreneurial approach to money.
The generational divide in views on money isn’t just about differing opinions, it’s about differing realities. Baby Boomers grew up in an era where financial comfort was achievable at lower income levels, while Gen Z is navigating a world where the cost of living outpaces wage growth and traditional benchmarks like homeownership feel increasingly out of reach.
