Gen Z really do have it worse: Those in their early 20s are earning less and have more debt than millennials did at their age

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Gen Z have been relentlessly mocked for spending money they don’t have on avocado toasts, designer bags and luxury holidays—and then complaining that they’ll never be able to save up enough for a house deposit. But in reality, research echoes that the youngest generation of workers really do have it worse financially. 

A new study from credit reporting agency TransUnion found those in their early 20s are earning less, have more debt and see higher delinquency rates than millennials did at their age.

The research compared the credit usage of 22 to 24 year olds to millennials, who were 22-24 years old 10 years ago. It found that 20-somethings today are taking home around $45,500, while millennials at their age were earning $51,852 when adjusting for inflation.

Despite earning less, young people today are being forced to dig deep for basic necessities like food groceries and gas thanks to inflation, with interest rates currently at a 23-year high in the U.S. 

The disparity could explain why debt is taking a bigger bite out of Gen Z’s earnings than the generation before them: Millennials had around $47,000 of their annual salary left after their mortgage, student loans and other debts were paid. Meanwhile, Gen Zers are left with little over $40,000.

Gen Z’s debt-to-income ratio is also higher than in 2013, at 16.05% compared to 11.76%.

Although the average credit card balance for 22-24-year-olds today is less than 25% higher than for young millennials ($2,834 vs $2,248), mortgages have shot up by nearly 45%. 

Mortgage balances in 2013 were around $113,300, the equivalent to $149,130 today when adjusted for inflation. In comparison, in 2023 Gen Zers have an average mortgage balance of $215,150.

“Gen Z consumers have seen their finances significantly impacted by the pandemic and its aftermath, even more so than the challenges faced by millennials as a result of the Global Financial Crisis,” Michele Raneri, vice president and head of U.S. research and consulting at TransUnion concluded.

Money’s impact on mental health

With higher expenses and less money to pay for it them, it’s no wonder young people today are nearly twice as stressed out as those before them. 

The report revealed that 14% of Gen Zers are “extremely stressed out”, compared to 8% of millennials in 2013. On the flip side, just 8% of Gen Z are extremely confident about their financial situation, compared to 13% of millennials at their age. 

It’s not the first study to indicate that chasing their tails is taking a mental toll on Gen Z. 

Numerous reports have warned that young people today have money dysmorphia and are doom spending—essentially splashing all of their cash and some—because they think saving for the future is futile.

“I’m just focusing on the present because the future is depressing,” one Gen Zer previously told Fortune.

Sadly but unsurprisingly, the same generation that has given up hope on the prospect of ever reaching major adult milestones like homeownership in the current climate, doesn’t see the point in working anymore and is struggling mentally.

Troubling figures reveal that in the U.K. alone 9.25 million working-age adults are economically inactive, of which three million under 25-year-olds are registered as not looking for work. At the same time, more than a third of 18-24-year-olds are suffering from a “common mental disorder” (CMD) like stress, anxiety, or depression—and those struggling financially are also those most likely to be suffering mentally.

Louise Murphy, a senior economist at the U.K.’s Resolution Foundation (RF) think tank previously told Fortune: “18-24-year-olds are now more likely to experience a common mental disorder than any other age group – and it is lower-qualified young people who are facing the worst economic consequences, with non-graduates with mental health problems significantly more likely to be workless than their graduate peers.”

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