Confronted with Higher Living Costs, 72% of Young Adults Take Action to Improve their Financial Health, finds BofA Better Money Habits Study

Rhea-AI Summary

Bank of America (NYSE:BAC) released its 2025 Better Money Habits® study, revealing that 72% of Gen Z (ages 18-28) are actively improving their financial health despite economic challenges. The study shows that 51% are focusing on savings and 24% on debt reduction.

Financial independence among Gen Z is increasing, with family support dropping from 46% to 39% year-over-year. The study highlights that 55% lack three months of emergency savings, and 43% are not on track for retirement savings. Despite financial stress affecting 33% of respondents, 90% take positive actions when worried about money, including budgeting and bill management.

Positive

• 72% of Gen Z taking proactive steps to improve financial health
• Reduced dependency on family support (down from 46% to 39% year-over-year)
• 90% take positive financial actions when stressed about money
• Gen Z median deposit levels remain higher than 2019 levels

Negative

• 55% lack sufficient emergency savings for 3 months of expenses
• 43% not on track for retirement savings in next 5 years
• 59% report overspending on small treats
• 53% report insufficient income for desired lifestyle

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CHARLOTTE, N.C., July 30, 2025 /PRNewswire/ -- Gen Z (ages 18-28) is finding adulthood more expensive than expected. Facing this, nearly three quarters of them are taking action to improve their financial health, according to Bank of America's 2025 Better Money Habits® financial education study, published today.

"Gen Z is challenging the stereotype when it comes to young people and their finances," said Holly O'Neill, president of Consumer, Retail and Preferred Banking at Bank of America. "Even though they're facing economic barriers and high everyday costs, they are working hard to become financially independent and take control of their money."

Key findings from the study include:

• Over the last 12 months, 72% took steps to improve their financial health, such as putting money toward savings (51%) or paying down debt (24%).
• Nearly two-thirds (64%) focused on reducing expenses – 41% cut back on dining out and 23% shopped at more affordable grocery stores.
• And more are going it alone. While 39% receive financial support from parents and other family members, this is down from 46% a year ago. And they are getting less money – 22% receive $1,000 or more per month compared to 32% a year ago, and 54% receive less than $500 per month compared to 44% a year ago.
• When it comes to their romantic lives, many Gen Z aren't spending money on dates – with roughly half of men (53%) and women (54%) spending $0 a month, and 25% of men and 30% of women spending less than $100 per month. 

According to the study, about half (51%) of Gen Z surveyed say the high cost of living is a barrier to financial success. Total monthly spending is higher than they thought it would be for 35%, especially for everyday expenses including groceries (63%), rent and utilities (47%) and dining out (42%).

Budget Busting
The study found that Gen Z feel a lack of income is a problem as well, with over half (53%) not feeling they make enough money to live the life they want, and many are struggling to save consistently. In fact, 55% don't have enough emergency savings to cover three months of expenses.

While Gen Z knows that saving for the future is important, they struggle to do so, with close to half (43%) saying they are not on track to actively save for retirement in the next five years, though they'd like to be. Many see saving for retirement and investing as symbols of financial independence (42% and 35% respectively). However, only a quarter (25%) contributed to a retirement account in the last year and one-in-five (21%) invested in the stock market, up slightly from recent years.

Despite a lack of income, Gen Z finds ways to enjoy the little things, whether celebrating a win or trying to help turn around a bad day: 57% buy themselves a small "treat" at least once a week. Unfortunately for over half (59%), this leads to overspending, making little treats a slippery slope.

And, according to data from Bank of America Institute, while there are signs of some pressures on younger generations, the median deposit level of Gen Z and Millennials remains elevated compared to 2019 levels – showing that these generations do not appear to be running down their savings in the face of higher costs.

Acting on Money Worries
A third (33%) of Gen Z are stressed about their finances, and of those, 52% say economic instability is a root cause. When stressed about their finances, many (90%) are likely to take action, including checking their bank account balance (69%), making a budget (64%), getting ahead on paying bills (46%) or other smart money moves. But for some, stress leads to avoidance or splurges: 33% of Gen Z are likely to avoid thinking about or taking positive actions on their finances when they're feeling stressed financially; 30% are likely to treat themselves to a purchase when worried about money.

Financial Green Flags
Gen Z understands the importance of financial health, and they value being transparent with friends about money. Consistent with findings in prior years, two-thirds (66%) of Gen Z don't feel pressured by their friends to spend beyond their means, and 42% feel comfortable declining social activities and letting their friends know it's because they can't afford them.

Financial health also matters in romantic relationships for Gen Z – with nearly four out of five (78%) saying that financial responsibility is an important attribute when choosing a significant other.

Methodology
This survey was conducted online from April 4 – 25, 2025, by Ipsos. This study is based on national samples of 1,069 general population adults (age 18 or older), 915 general population Gen Z adults (age 18-28). The survey was conducted both in English and Spanish and utilized samples from both opt-in sources and the Ipsos KnowledgePanel®, the largest and most well-established online probability-based panel that is representative of the adult US population. The margin of sampling error for the general population sample is +/- 3.1 percentage points and for the general population Gen Z sample is +/- 3.5 percentage points at the 95 percent confidence level.

Better Money Habits
At Bank of America, we're committed to helping people lead better financial lives by equipping them with the skills, knowledge and confidence to succeed. That's why we created Better Money Habits, a financial education platform of tools and information that helps people make sense of their money and take action to improve. As a cornerstone of Better Money Habits, we offer free financial education content and tools, like our Gen Z Financial Guide that breaks down financial topics like budgeting, building credit, borrowing and investing in a way that's approachable and easy to understand. We continually look for ways to expand the reach of Better Money Habits and also offer Spanish language resources on the site.

Bank of America Institute
Bank of America Institute is dedicated to uncovering powerful insights that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analyses from across the bank and the world to provide timely and original perspectives on the economy, sustainability, and global transformation. The Institute leverages the depth and breadth of the bank's proprietary data, from 69 million consumer and small business clients, 58 million verified digital users, $4.3T in total payments in 2024 and $1.2T in consumer and wealth management deposits. From this robust data set, the Institute provides a unique perspective on the health of the economy. It also elevates thought leadership from throughout the bank that addresses long-term trends and shares these findings with the general public.

Bank of America
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,700 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 59 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

Reporters may contact:
Susan Atran, Bank of America
Phone: 1.646.743.0791
susan.atran@bofa.com 

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SOURCE Bank of America Corporation

FAQ

What percentage of Gen Z are taking steps to improve their financial health in 2025?

According to BofA's study, 72% of Gen Z took steps to improve their financial health in the past 12 months, with 51% focusing on savings and 24% paying down debt.

How many Gen Z adults receive financial support from family members in 2025?

39% of Gen Z receive financial support from family members, down from 46% a year ago. Of those, 54% receive less than $500 monthly, and 22% receive $1,000 or more monthly.

What are the main financial challenges facing Gen Z according to Bank of America's 2025 study?

The main challenges include high cost of living (51% cite as barrier), insufficient emergency savings (55% lack 3-month coverage), and income concerns (53% say they don't make enough money).

How are Gen Z managing their retirement savings in 2025?

Only 25% of Gen Z contributed to retirement accounts in the last year, while 43% are not on track to actively save for retirement in the next five years. Additionally, only 21% invested in the stock market.

What percentage of Gen Z experience financial stress according to BAC's study?

33% of Gen Z report being stressed about their finances, with 52% citing economic instability as the root cause. However, 90% take positive actions when financially stressed.