Most of us were told when we were younger to save our pennies for the safe investment of one day buying a home, but assuming you followed that advice and ended up in this housing market… then what happens next?
Case in point: A recent story in the Advice column It’s about a wealthy young man who questions the idea of saving money, even though it’s clear that money will soon become too scarce.
Gen Zers with six-figure savings are wondering what the point of saving money is in this economy.
Indeed, this young person is living the dream life compared to many of their peers, Gen Z. Research shows that Gen Z is suffering much more financially due to inflation. More than millennials At their age, that’s really saying something.
This Gen Z contributor to Slate’s “Pay Dirt” financial advice column is one of them: They’re careful and frugal, trying to save as much of their paycheck as they can, totaling just over $100,000.
Interestingly, their six-figure savings accounts are not unusual at all. The continued economic crisis and tough job market they find themselves in have led to many of them being forced to retire. Research The average Gen Zer starts saving for retirement at age 22, 15 years earlier than previous generations.
Still, the young man writes that he’s an outcast among his friends, “many of whom spend a lot of money on things like going out and vacations and are still in a very ‘spending’ phase of life.” When it comes to saving money, his friends always ask, “‘What on earth are you saving for?'”
And despite having six figures saved, this Gen Zer is starting to side with his friends, given the economic situation they’re in no position to compete with. “I’ve started to wonder lately what exactly am I saving for,” he said.
Gen Z is wondering if they should spend their money instead.
“The likelihood of ever being able to purchase a home in my area, where the cost of living is high, is actually very low,” they wrote, adding that “many people here remain lifelong renters well into middle age,” which is typical of many large cities like New York.
If that sounds negative and sluggish, it probably is. U.S. home prices are May 2024big cities like New York and Los Angeles are leading the way when it comes to skyrocketing price increases across the country. 54% since 2019.
And just like the last time home prices skyrocketed, experts say they’re unlikely to fall anytime soon unless there’s a national financial collapse like in 2008, which experts say is highly unlikely.
So what’s the problem? Common sense would dictate you save up and buy a home, but this Gen Z generation is confused about what to do instead. “Sure, there’s money for emergencies and retirement,” they write. “But beyond that, what exactly is this money for?”
Financial experts say saving is more important than buying a home because money gives you security.
The financial experts at “Pay Dirt” offered the same advice that many older people probably have: There’s far more to save for than just a home, especially in an economy as shaky as ours.
“We want you to rephrase the question,” the experts wrote. “Imagine that the thing you’re saving for is ‘choices and opportunities.'” They explained that this could be anything from taking a year off work to helping a loved one, to retiring early in the future, to donating to charity.
Also, as we get older, our lives often change, and so do we have options: do we want to change jobs, stay home to have children, or become a caregiver for our family?
“Having money in the bank (and hopefully in the stock market) gives you the choices and opportunities to explore and experience life differently,” the experts write.
Nothing stays the same forever, including the economy and the things we wanted when we were younger.
The Pay Dirt expert also noted that there are plenty of real estate opportunities beyond simply buying a home, from vacation homes to investment properties — but that neither he nor this Gen Zer may have considered.
It’s easy in your 20s to think you know exactly what you want for the rest of your life, but as a 40-something, I can tell you that what you want changes often, sometimes multiple times.
I thought I would rent for the rest of my life, I spent most of my 20s in Los Angeles and thought I would live there for the rest of my life, then I moved to New York in my 30s and thought the same thing.
Then, in my 40s, I found myself yearning to return to the place I’d sworn I’d never return to: the state where I grew up. Ironically, it was a place where I could now afford to buy a house if I’d only saved up all those years spent wandering.
Chances are, you’ll stay where you are at 25. Lots of people do. But the only constant in life is change. Live life to the fullest and spend your money accordingly. But don’t let not saving for the future just because it seems vague (or downright scary).
One day you may find that what you want changes, and you’ll be glad you prepared yourself for whatever that dream turns out to be in the future.
John Sandholm is a news and entertainment writer covering pop culture, social justice and human interest topics.
