Rising living costs have been the biggest concern for Gen Z and millennials worldwide for five straight years. Deloitte's most recent global survey of 22,500 adults across 44 countries, including India, supports this concern. Only 5% of Gen Z and 10% of millennials feel financially satisfied. Low levels of financial satisfaction have often been linked to higher levels of stress and anxiety. Recognizing this anxiety is only the first step. The bigger challenge is to clarify the central question: what drives these concerns, and to what extent do they reflect real financial pressures versus perceptions of financial insecurity? Each of these questions deserves careful thought.
The reason for this widespread anxiety is clear in the data: globally, 69% of Gen Z and 64% of millennials say housing affordability affects where they can live and work. About half of Gen Z (51%) say they cannot afford to own a home, and 40% of millennials say the same. Nearly one in two in both generations live paycheck to paycheck, and about one in three have difficulty meeting basic living expenses each month. Similar trends are reflected among Indian Gen Z and millennials.
This challenge is not limited to one country. Deloitte's survey spans five continents, and in every region, the rising cost of living is a significant concern. Wages have not kept pace with rising housing and daily living costs, and the survey shows how this pressure is felt across regions. Generation Z entered the workforce during the uncertainty of the COVID period, and now both generations are trying to find their footing as artificial intelligence changes the landscape of entry-level work. The financial pressure is real, and the rapid pace of economic and technological change only adds to it. While AI is creating new job opportunities such as, prompt testers and machine learning interns to help companies advance faster other companies are replacing entry-level jobs such as bookkeeping and data entry with AI. For those directly affected, this often leads to uncertainty about what the future holds.
One concept increasingly used to explain this disconnect between financial reality and financial perception is "money dysmorphia": the gap between a person's real financial situation and their sense of security, often driven by comparisons with what they see on social media. For some people, even responsible financial behaviour can feel inadequate when social media creates the impression that everyone else is financially better off.. This phenomenon may add another layer to financial stress by making individuals feel financially insecure even when their objective circumstances have not worsened. . Financial goals can also become a source of anxiety. 41% of Indian Gen Zs believe that financial goals cause stress and anxiety.
Research by Sendhil Mullainathan & Eldar Shafir on the scarcity mindset has shown that merely contemplating financial problems can greatly reduce cognitive capacity, regardless of a person's real financial situation. A more recent study extended this concept by showing that well-being depends not only on income but also on how individuals perceive their financial position relative to others. Importantly, the study found that people who felt they were falling behind financially but had a wider, longer-term perspective enjoyed considerably better well-being than those who focused on immediate, day-to-day issues, even when their actual financial circumstances were the same.
However, the same data shows an unexpected development: while the cost of living remains the main concern, many other indicators of financial and psychological well-being are actually improving. Fewer Gen Zs and Millennials are living paycheck to paycheck, dropping from 52% to 47%. The share of those struggling to meet monthly expenses has also fallen to 34%. Optimism about the future is growing, with 53% of Gen Z now expecting their financial situation to improve, up from 49% the year before. Self-reported mental health has also improved, with 63% of Gen Z rating their mental health as good or excellent, up from 52% a year earlier. In other words, financial anxiety remains high even as several measures of financial and psychological well-being are moving in a positive direction.
In short, two individuals who have the same bank balance can still experience quite different amounts of anxiety, depending on the standards they use to compare themselves and the way they view their own situation. This effect is a documented phenomenon rather than a subjective opinion. This suggests that Gen Z’s financial anxiety may be shaped by two forces at the same time: genuine financial pressures and the psychological effects of social comparison. The data show both of these pressures at the same time.
The discussion of financial anxiety and trends in underlying indicators points in different directions. That tension reminds us that the most frequently mentioned concern is not the one worsening most rapidly. One part of this challenge is about financial planning, while the other is shaped by what we see in the media and how we think about our own situation. Blending these into a single feeling that everything is hopeless is exactly the kind of thinking research shows can make people feel worse, regardless of their actual financial circumstances. The central lesson is to distinguish between real financial pressure and the distortions created by comparison.
Tanya Zaveri
