February 6, 2024

Financial Struggles of Unemployed Gen Z: The Cost of Starting a Career

Financial Struggles of Unemployed Gen Z: The Cost of Starting a Career

In a world that demands economic resilience, the journey from unemployment to employment has become an uphill battle for Generation Z. Despite impressing hiring managers and securing job offers, many young adults are confronted with a harsh reality—having to decline job opportunities due to the financial burdens associated with starting a new job. Recent research underscores the financial challenges that cast a long shadow over the career aspirations of today's youth, plunging them into a sea of uncertainty.

A survey conducted in the United Kingdom, as part of the Prince's Trust annual NatWest Youth Index 2024, provides a stark depiction of the challenges faced by 16-to-25-year-olds in their pursuit of a brighter future. The findings reveal that the cost of living has created a cloud of anxiety around the career prospects of today's youth, leaving them grappling with financial insecurities.

For many Gen Z job seekers, the obstacles begin long before their first day on the job. The need to invest in a new work-appropriate wardrobe, or in more practical terms, a uniform, adds an unforeseen expense to the mix. The pressure to make a positive first impression compels young job seekers to allocate funds for attire that aligns with workplace expectations.

The financial journey takes another taxing turn as the costs continue to mount. Securing a job often necessitates commuting to the workplace, which entails additional expenses such as travel cards and transportation costs. Ironically, the pursuit of employment can lead to financial strain, pushing young individuals to question the feasibility of accepting job offers.

Perhaps the most concerning revelation from the survey is that one in ten unemployed Gen Zers has had to reject a job opportunity due to these mounting costs. The dream of launching a career turns into a cruel reality as financial constraints become insurmountable barriers.

Money confidence has reached its lowest point in the 15 years since the index began monitoring the well-being of young people in the U.K. Over half of those surveyed harbor fears that they will never achieve financial security. The mere thought of money is enough to induce stress in over a third of them.

This financial anxiety is particularly acute among young women, with 60% worrying that the soaring cost of living will thwart their path to financial security. Meanwhile, half of the surveyed Gen Zers fear that they won't earn enough to support a family. In contrast, around 45% of young men share these concerns.

In the face of financial uncertainty, an unexpected savior emerges: TikTok. The research shows that the number of 16-to-25-year-olds turning to the social media platform for lessons in "loud budgeting" has doubled since 2022. It appears that Gen Z is actively seeking financial advice and guidance through unconventional channels in a bid to navigate these economic challenges.

Jonathan Townsend, the U.K. chief executive of the Prince's Trust, highlights the urgent need for action. He emphasizes that unemployed young individuals find themselves trapped in a vicious cycle where unemployment negatively impacts their mental health, which in turn affects their ability to secure employment. A staggering 40% of respondents admit to facing mental health struggles, with a third fearing that these struggles will hinder their career aspirations.

For a significant portion of young workers, mental health challenges have already disrupted their professional lives. One in five has missed school or work in the past year due to mental health issues. Eighteen percent have felt too overwhelmed to even apply for jobs, and 12% have found it too daunting to attend interviews. Alarmingly, one in ten young people from disadvantaged backgrounds has resigned from a job this year due to mental health challenges.

Separate research corroborates these findings, revealing that even when young workers do show up for work, they are mentally absent for the equivalent of a day's work every week. This translates to nearly 50 days a year where they struggle to accomplish tasks effectively.

Despite the grim outlook, there is a glimmer of hope. Gen Z has outlined how employers can step in to alleviate these challenges. A third of respondents emphasize the need for support in securing work experience, guidance on crafting CVs, interview etiquette, and training to acquire job-specific skills.

While the majority of young people remain resolute in their determination to achieve their goals, they require practical support and guidance to overcome the formidable challenges they face. As the landscape of work continues to evolve rapidly, Gen Z seeks proactive solutions that empower them to break free from the cycle of unemployment and mental health struggles, ultimately shaping a more promising future.