Nearly half of Generation Z adults lack emergency funds and many are developing concerning financial habits, according to new research from financial literacy platform Frich. The company’s analysis of one million users reveals a generation struggling with financial planning amid economic uncertainty.
The anonymous data study found that 47% of Gen Z don’t maintain any emergency savings, while only 29% are actively building such funds. Those who do save typically fall 80% short of recommended amounts, with average emergency funds of just $6,820.
“Gen Z is still unprepared for emergencies and extreme situations, despite the frequency of such events over the past year,” said Aleksandra Medina, Frich co-founder and Chief Product Officer. “Rising inflation, a difficult job market, and a persistent housing crisis have created an environment where young people struggle to prioritize savings.”
The research identified a concerning trend dubbed “doomspending” — reckless spending driven by pessimism about the future. This fatalistic view leads many young adults to max out credit cards and prioritize immediate gratification over long-term financial security. About 44% of Gen Z respondents reported maxing out a credit card at least once.
Despite these troubling patterns, the generation maintains specific financial goals. When asked what they’re saving for, 21% cited homeownership, 17% mentioned vehicles, and 13% prioritized education expenses.
Katrin Kaurov, CEO and co-founder of Frich, believes social media contributes significantly to these financial challenges. “We realized that Gen Z has no clue what to do with money and we’re all pretending on social media that we have our lives together, when in reality, we don’t,” she explained in a recent interview.
Financial literacy rates among Gen Z remain concerning, with studies showing they display the lowest confidence in their financial knowledge compared to other generations. This knowledge gap hampers their ability to build credit histories that will be crucial for future major purchases like homes.
When facing financial difficulties, 31% of Gen Z would ask family members for assistance, 27% would turn to friends, and 25% would take on debt. These patterns reflect both their interconnected social nature and limited financial options.
Financial experts suggest improving financial education could help address these issues. Currently, 84% of Gen Z express desire for greater financial literacy but find limited resources tailored to their needs and communication styles.
Frich, founded in 2021, has grown to over 100,000 users across the United States and aims to make financial topics more approachable for young adults through anonymous peer comparisons and social tools. The platform recently secured $2.8 million in funding to expand its services.
“We dream of a world where everyone can feel confident about money regardless of the school they went to or the family they grew up in,” said Medina, emphasizing the company’s mission to transform money into a topic that’s “social and empowering” rather than taboo.
As Gen Z continues to enter the workforce and gain economic influence, their financial behaviors will have increasing impact on broader economic trends. Financial institutions and educators face the challenge of helping this generation overcome current habits and develop more sustainable approaches to money management before patterns become entrenched.