
H&R Block’s 2024 Outlook on American Life report released on Nov. 12 found that Gen Z is more innovative and financially savvy than Americans might expect. Gen Zers are changing jobs at unprecedented rates, mostly to increase their salaries. Being "masters of the side hustle," they are also earning more by starting new businesses, following their passions and investing their money. However, they also feel the burden of debt the most.
The fourth annual report from H&R Block is based on anonymized, aggregated tax return data from the 11.4 million tax filers whom H&R Block tax professionals assisted virtually or in its offices over tax season 2024. The tax returns from the past 25 years were also used to determine historical income trends across generations.
The report also includes findings from four nationwide surveys of 7,852 Americans conducted between July and August 2024. Among those surveyed were 1,503 Gen Z respondents, which is one of the largest surveys thus far of Americans ages 18 and 28.
Gen Z's financial know-how and willingness to work hard to earn more money are clearly demonstrated by the report. According to the survey findings, one in three changed jobs in 2023, and more than one-third made the shift to increase their salary. While a majority (59%) would rather work for a bigger firm as a salaried employee, 29% aspire to work for themselves by starting a business, influencing followers on social media, or pursuing a career as an artist/maker.
Furthermore, roughly one in four (24%) drives for an app to add to their income, and more than half (51%) expect to monetize a hobby in the coming year. To help reach their financial goals—which include purchasing a home (63%) and saving up for retirement (86%)—Gen Z is also investing, mostly via employer-sponsored plans (41%), as well as in cryptocurrencies (22%) and gold and silver (15%). They also are more than twice as likely as millennials (9% vs 4%) to invest in fine art and collectibles.
Gen Zers were also more willing to move last year, changing their state residency for a job more than any other generation. They chose cities where they could maximize their search for career opportunities and earn them higher pay. The top destinations for ambitious Gen Z are New York, Chicago, Brooklyn, San Antonio and Austin.
However, the burden of increased debt is on the horizon not just for this generation, but for all Americans. Gen Zers have the least debt compared to their older counterparts, but feels the most burdened. Gen X is carrying the most credit card debt (55%), followed closely by millennials (49%), boomers (47%) and then Gen Z (39%). However, despite carrying the least debt, according to the report they feel the most burdened compared to their older counterparts.
Of those holding credit card debt, as many as two in three people say their level of credit card debt is unmanageable. Aside from credit card debt, as many as 1 in 6 Americans hold student debt, and over a third say they have more student debt than they can manage.
Ongoing financial pressure and spending continue to undermine Americans’ ability to save. Nearly one in three taxpayers say they spent all or more than they earned last year. Almost one in five say that, without income, they wouldn’t be able to cover household expenses for a full week. Gen X is the most likely to be “not at all confident” that they are doing what is needed to meet longer-term goals, such as saving for retirement.
Other findings in this year's report include that found that Americans are optimistic regarding their economic mobility. The data signals that they have reason to be. The report demonstrates how most Americans (66%) across income levels and generations feel optimistic regarding their potential for income growth, prospects for retirement and ability to maintain financial stability in spite of the threat of unmanageable debt.
Most Americans, regardless of income and demographics, are optimistic regarding their income growth and ability to retire and maintain financial stability in the midst of increasing expenses and debt. Further, most Americans are expected to exceed their parents’ economic opportunities. This is true of 70% of Gen Z, 65% of Millennials, 53% of Gen X, and 60% of Boomers.
Tax-return data indicates that this optimism is well-founded: 71% of Gen Z, 62% of millennials, 56% of Gen X and 51% of boomers are earning income at rates that actually beat inflation. Gen Z saw the biggest relative earnings rise, making 30% more in 2023 compared to how they did in 2022. Of those who participated in the survey, 60% of Gen Z and 53% of millennials expect their financial situation to be better in the coming year mostly because of their rising incomes. Each of these generations has more buying power as well.
Gen Z is enjoying as much as 30% more buying power compared to millennials of the same age. At the same time, millennials have as much as 30% more buying power compared to Gen X at their same age. Gen X has roughly 20% more buying power than Boomers at the same age.