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Gen-Z is seizing control of the narrative when it comes to finances. Seventy-two percent of Gen-Z have moved toward paying down debt or increasing their savings in the last year, according to Bank of America’s 2025 Better Money Habits® financial education study.
Running the Numbers
Bank of America surveyed 1,069 general population adults ages 18 or older and 915 general population Gen-Z adults (which span the age range of 18-28), with the survey conducted in English and Spanish.
Inflationary costs have impacted nearly all day-to-day expenses—it isn’t just the price of eggs on the upswing.
The cost of food went up by 3% between June 2024 and June 2025, with grocery prices going up 2.4%, while the cost of dining out went up by 3.8%, according to the U.S. Bureau of Labor Statistics. In response, Gen-Z has remained principled in their determination to steer their financial future, with 41% of the age group cutting back on dining out, and 23% shopping at more affordable grocery stores, according to the BofA study.
The emphasis on reducing expenses points to a focus on achieving financial stability. While 53% of participants reported that they don’t make enough income to live the life they desire, 42% believe that saving for retirement is a symbol toward financial independence. However, only a quarter (25%) of participants were able to actively contribute to a retirement account in the last year, reflecting the generation’s lack of disposable income.
When stressed about finances, the survey found that 90% of Gen-Z are likely to monitor and take action, including checking their bank account balance (69%), making a budget (64%), getting ahead on paying bills (46%) or other proactive steps.
Financial Literacy: It’s a Trend
Gen-Z is on track to become the most financially literate generation. A 2023 study by global investment management company Vanguard found that the age group is participating in their 401(k) plans at a much higher rate than similarly aged employees over a decade ago. The report found that in 2006, just 30% of employees ages 18 to 24 participated in their plans, but Gen-Z’s participation rate rose to 62% in 2021, a 32% increase that accounted for the highest rise across any age group. A Goldman Sachs survey from the same year explains the aggressive saving: Gen-Z is ambitious when it comes to early retirement, with 44% of Gen-Z respondents saying they plan to retire earlier than age 60. Only 14% said they planned to retire between ages 65-69.
The internet is likely at least one of the reasons why financial literacy has flourished among members of Gen-Z, democratizing the process. A 2023 Pew Research Center report found that adults ages 18 to 49 are more likely than those over 50 years old to have learned about personal finances from the internet (50% versus 19%).
Still, Gen-Z finds themselves continuing to struggle to save consistently. The BofA study found the majority of Gen-Z, or 55%, don’t have enough emergency savings to cover three months of expenses.
Why Time Is Your Most Important Asset
The idiom “The best time to plant a tree was 20 years ago. The second-best time is now,” encapsulates the importance of time, especially when it comes to savings. Roth IRA accounts depend on compound interest, rewarding those who start saving early and often. For Gen-Z, opening and contributing to a Roth IRA account could be a big step in the right direction toward securing their financial future.
A critical factor to keep in mind is that Roth IRA earnings on growth and qualified withdrawals are tax-free, maximizing the impact of compound interest, until you take the money out at age 59 ½. The earlier you start investing in a Roth IRA, the more you stand to earn over time, as even modest contributions can grow exponentially over decades. Money in a Roth IRA can be accessed before age 59 ½, but there can be penalties depending on the reason for the withdrawal.
Let’s say you start contributing around $500 per month and max out your yearly contributions into a Roth IRA at the age of 25. Over the next 30 years, you will have contributed $180,000 total—but if you get a 6% annual return on your contributions, your balance could be worth more than $500,000 in 30 years, or by age 55.
While investing is always a risk with the market in constant flux, the S&P 500 has had an average annual return of 10.33% (6.47% when adjusted for inflation) since 1957.
When choosing a Roth IRA account, look out for services that offer robo-advisors (algorithm-driven investing services), as well as fractional share trading, or portions of stock. It’s also important to note any fees that the service charges.
Keep in mind that IRAs have contribution limits, and in 2025, those are:
- For those under age 50: $7,000
- Over 50 (Catch-Up Contribution): $8,000 ($7,000 plus $1,000 catch-up)
Services like Fidelity are great for beginner investors to open accounts with no minimums, and it charges zero service fees for accounts under $25,000. For accounts with balances of $25,000 and over, the platform charges a low fee of 0.35%, which entitles users to unlimited 1-on-1 coaching calls.
No matter the account, it’s a good idea to invest your IRA funds in various options within your account, including stocks, bonds, mutual funds and ETFs.
Read more: Best Roth IRA Accounts of 2025