How Do Your Parents' Paychecks and Bills Compare to Yours?
Every generation has had its share of financial obstacles to overcome, but Gen Z has been dealt a particularly tricky hand.
The COVID-19 pandemic, which struck while many Gen Zers were in college or just starting out in the workforce, triggered massive educational and career setbacks, along with an economic tailspin from which we’ve yet to fully recover. If anything, what looks like recovery has only exacerbated difficulties for the working class, according to the World Bank.
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But wait, there’s more foiling Gen Z’s path: impossibly high home and rent prices, inflation that just won’t quit and tremendous unease about job security amid the towering rise of AI.
Despite no shortage of challenges, Gen Z is, from a big-picture perspective, actually doing pretty good with money. They save more aggressively than boomers, Gen X or millennials did at their age and they’re so passionate and savvy about early retirement that they may actually be able to make it happen for themselves.
How does Gen Z’s financial life compare to previous generations when it comes to income? How has purchasing power changed over the past five decades? It’s a fascinating paradox to explore.
Wages for College Educated People Have Gone Way Up, but So Has Cost of Living
First, we know that wages for people with college degrees have gone up (this is called the college wage premium, and though it has plateaued, per the Thomas B. Fordham Institute, it still exists. The Bureau of Labor Statistics reports that college education not only secures higher wages, but steadier employment.
Positioned to be the most well-educated generation yet, Gen Z could earn more than their parents did at their age, but they’re also cornered into spending much more on essentials, with rising costs of living unmatched by income rates.
“Housing, healthcare, higher education and childcare have generally increased much faster than overall inflation,” said Diana Richey, JD, CFP, investor and the author of “The Truth About Money." “So, the reality is that many of the things people need most have become dramatically more expensive.”
The boomers entered the '70s with a national average wage of $6,497. That inflationary decade saw wages more than double at $13,773. Unfortunately, wages have only risen to $64,220 for full-time employees, with Gen Z constituting more of the low-earning end of the spectrum.
At the same time, inflation has not only continued to work its wicked magic, the cumulative rate of inflation itself has run away. The end result is that workers today have 63% more purchasing power — but spend it on costs of living that have more than doubled or even quadrupled. The essentials are outpacing inflation, and inflation is already haywire.
Gen Z Can Afford More Luxuries but May Struggle To Cover Essentials
A strange and compelling insight: Gen Z has more ability to buy nice things than their parents did, but they’re more limited when it comes to essential expenses.
“The paradox is that many people today can afford better technology, better cars and far more conveniences than previous generations,” Richey said. “And yet they often feel financially stretched because the meaningful, big-ticket items — like housing, healthcare, childcare and education — eat the majority of their income.”
Homeownership and College Educations Used To Be Pretty Accessible
In 2025, 27.1% of Gen Z owned their home in the U.S., up from 26.1% a year prior, according to a report by Redfin. That’s a big uptick, but Gen Z is still behind their parents here. Redfin’s analysis found that as of 2025, 38.3% of 28-year-old Gen Zers owned their own home. Previous generations enjoyed a significant and comparable uptick, with 42.5% of Gen Xers having attained homeownership at that age, and 44.4% of baby boomers.
Most Gen Zers can’t afford to buy a home, and though their parents may have technically made less money, they had a lot more wiggle room on the big and essential costs of living. Houses and apartments were not nearly as expensive as they are today and, until relatively recently, a middle-class salary could get you a nice home.
“The exact numbers vary, but the broad trend is clear. A boomer in her 20s could often purchase a home for a much smaller multiple of her annual income,” Richey said.
A college education was also a lot cheaper and national student loan debt was fairly low until the early 2000s.
“College was generally more affordable and many employers offered pensions,” Richey said.
More Money, Less Purchasing Power
The bottom line: many Gen Zers make more than their parents did at their age, but once you factor in how expensive life has become, it’s as though they make less.
“While wages have increased over time, many Gen Z workers have higher housing costs, larger student loan balances and higher living expenses relative to income than their parents did at the same age,” said Elias Friedman, CFP, founder, senior wealth advisor at Kadima Wealth. “A larger percentage of each paycheck is frequently allocated to many fixed expenses before they have an opportunity to save or invest.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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