Why Gen Z Struggles to Save: It's Not Always About Low Salaries

Many young people, particularly Generation Z, struggle to save despite having jobs and a steady monthly income. Their salary often runs out before the end of the month, leaving little or nothing to set aside for the future. This situation is not always caused by low income; the issue is more frequently linked to how a person manages their finances.

Sharia economics expert and lecturer at Universitas Muhammadiyah Yogyakarta (UMY), Satria Utama, stated that the difficulty in saving is a classic problem experienced by the middle class, including young people who are new to the workforce. ‘The classic problem of the middle class is that income always feels like it is used up for various needs. As a result, many people find it hard to set aside money for the future. They assume they will earn income again the following month, so saving does not become a priority,’ he said.

According to Satria, the root of the problem does not solely lie in the amount of income. In many cases, the failure to save is caused by unhealthy financial behaviour. When income increases, some people immediately raise their standard of living and spending. This phenomenon is known as lifestyle inflation, where a rise in income is directly followed by an increase in consumption. Consequently, the capacity to save remains limited even though financial capability has actually improved.

‘Many people actually have sufficient income but still find it difficult to save. The problem is not the income, but consumption behaviour. When income rises, it is consumptive spending that increases, while savings do not grow significantly,’ Satria said. Beyond consumption issues, Satria also highlighted the importance of having clear financial goals. He noted that many people save merely because they consider it a good habit, without having specific and measurable targets. A clear goal can serve as a strong motivator in managing finances. ‘Saving is like going on a journey. Without a clear destination, a person will lose motivation more easily. They will tend to stop midway when facing obstacles or urgent needs,’ he said.