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Gen Z needs to realise big cities aren’t everything

Gen Z needs to realise big cities aren’t everything

Gen Z, like all generations, only have their youth once, but taking a few years in early adulthood to establish a financial safety net before moving to a more expensive city could make the difference in building wealth over the long term.

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Last Updated : 22 May 2024, 04:05 IST
Last Updated : 22 May 2024, 04:05 IST
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By Erin Lowry

The class of 2024, like generations before them, might believe it’s wise to venture to major cities after college. Cities, after all, are where wealth-generating industries thrive.

But today, many major cities have become outrageously expensive, especially when it comes to housing.

Rather than constantly struggling to make ends meet, many young Americans would be better off starting their careers, and establishing their financial lives, in lower cost-of-living areas.

Despite the potential financial advantages, Americans don’t move from state to state in high numbers.

Approximately 8.2 million people relocated to a different state in 2022, which was a modest increase from 2021, according to Census Bureau data. That’s less than 2.5 per cent of the total population.

The reluctance to move needs to change, especially when remote work is an option for some. Roughly 39 per cent of college-educated Americans 25 and older did telework for at least part of the week in April 2024, according to the US Bureau of Labor Statistics’ Current Population Survey.

Even when remote work isn’t an option, there are plenty of affordable midsize cities with robust job markets that allow early-career workers to maximize their paychecks.

(Except, that is, for Gen Zers able to peacefully indulge in free accommodations from generous parents, which is the superior deal.)

The slowdown in hiring for professional services jobs, sometimes described as the white-collar recession, makes it even more important for those working in affected industries like finance, tech and media to consider opportunities beyond the big, paycheck-draining cities.

While no one likes to think about the prospect of layoffs, having a low monthly overhead for living expenses would make it easier to weather a job loss while hunting for a new opportunity.

Of course, moving away from jobs in expensive cities could mean lower pay, even for employees of businesses headquartered in New York or San Francisco.

But accepting a salary reduction to live in a city where housing costs less could still put young workers ahead financially. Nearly a quarter of Americans fear they will experience homelessness due to their financial situation, according to a report from micro-investing app Acorns.

Gen Z and millennials are three times more likely to have this concern than older workers.

Leaving expensive cities doesn’t require moving to Small Town, USA, if that’s unappealing.

The greater Minneapolis area, for instance, is home to 18 Fortune 500 companies including UnitedHealth Group Inc., Target Corp. and 3M Co. Minnesota also boasts an unemployment rate well below the national average.

Starting out one’s adult life and career in an affordable area not only helps maximize saving and investing opportunities — while having a chance to pay off debt; it can also protect your mental health.

Being surrounded by affluence, or at least the markers of wealth, can wire your brain to experience money dysmorphia, a feeling of insecurity around one’s finances, especially in comparison to those around you.

Some 35 per cent of people living in a major city report feeling that they will never have the things they want in life due to their financial situation, according to the Acorns report.

On the other hand, people often elect to live in areas of the country that best align with their political and moral preferences. A young adult, or indeed anyone moving to an area purely for financial reasons doesn’t make sense if local laws pose a threat to their quality of life.

But Gen Z needs to be wary of allowing TikTok or the news to be their only sources of information. It’s important that those considering a move spend time in the area and speak to people with their political and social preferences. The stereotypes of a region might not align with people’s lived experiences.

Another major consideration is the potential advantage of staying near support systems, like living near one’s family of origin, in-laws or closest friends.

As phases of life unfold, it can be helpful to have people who provide free care and support, such as grandparents who are willing to watch grandchildren or help with pickup and drop-off, or loved ones who can bring over meals or provide physical support when someone is ill or recovering from surgery.

Gen Z, like all generations, only have their youth once, but taking a few years in early adulthood to establish a financial safety net before moving to a more expensive city could make the difference in building wealth over the long term. And who knows, they might even decide to put down roots in the place where they started.

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