For many young people today, wealth doesn’t look like a savings account or a starter home. It looks like student loans. Credit card bills. Rent that eats up half your income. For Gen Z and younger millennials, the financial reality isn’t just “tight”—it’s upside-down. 

This generation isn’t building wealth—they’re starting adulthood in a financial hole. Economists call this negative wealth, and it’s becoming the norm, not the exception.

But what exactly is negative wealth? And why is it hitting today’s under-40s so hard?

What is Negative Wealth?

In simple terms, negative wealth happens when your debts are bigger than your assets. So if you owe £40,000 in student loans, have £2,000 in credit card debt, and your only asset is £500 in a savings account—you’re sitting on negative wealth. It doesn’t mean you’re bad with money. It means the system is stacked against you from day one.

Negative wealth used to be a short-term blip. You graduate, maybe rack up some debt, then start working, saving, and eventually tip the scale the other way. But for Gen Z and young millennials, that turnaround is being seriously delayed—if it’s happening at all.

The Cost of Just Existing

Start with education. In the UK, the average graduate now leaves university with around £45,000 in student loan debt. And while repayments are income-based, the sheer size of that number hangs heavy—especially when it can take decades to pay off (if ever).

Then there’s rent. According to ONS figures, rents in England hit record highs in 2024, with average London rent now topping £2,000/month. That’s before utilities, council tax, food, transport, and the occasional £4.50 oat flat white. For young adults trying to live, let alone save, there’s often little left over.

And then we add credit. Buy Now Pay Later (BNPL) services like Klarna and Clearpay have become incredibly popular with younger shoppers—but they can quickly lead to spiralling debt. Credit cards are often seen as a backup for “emergencies” (like paying for the vet, fixing a car, or—let’s be real—covering bills), but if you’re only paying the minimum each month, the interest can trap you in a long-term cycle.

Put simply, life is expensive—and young people are being priced out of stability.

Wealth Inequality Is Growing Up

Older generations—particularly boomers and Gen X—were able to build equity through homeownership, defined benefit pensions, and more stable wages. Today, that’s largely out of reach for young adults. Homeownership rates for those under 35 have dropped dramatically in the last two decades. Many young people spend years in the rental cycle, unable to save for a deposit while watching house prices soar.

Meanwhile, intergenerational wealth plays a huge role. If your parents own a home, you might get help with a deposit or even inherit property one day. But if your family struggled financially, you’re far more likely to be stuck paying rent and relying on credit.

And let’s not forget the emotional toll.

Financial Stress Is Mental Stress

Negative wealth doesn’t just affect your bank balance—it affects your mental health, your career decisions, and even your relationships. Worrying about money constantly can lead to anxiety, sleepless nights, and feelings of failure. It also limits your choices. Want to go freelance? Start your own business? Move to a new city? Those options feel risky if you’re already drowning in debt.

In fact, research from the Money and Mental Health Policy Institute found that people with debt are three times more likely to experience mental health problems. It’s no surprise. When financial pressure never lifts, it’s hard to feel hopeful.

If debt is starting to feel like a constant weight, there are places you can turn for help. StepChange and Citizens Advice offer free, trusted support across the UK. Tools from MoneyHelper can help you budget more clearly, and services like insolvency-online.co.uk provide confidential guidance for those considering more formal debt solutions. And if money stress is affecting your well-being, the NHS offers mental health services you can access directly.

So, What Now?

The answer isn’t as simple as “budget better”—because the issue isn’t just budgeting, it’s systemic. Wages haven’t kept pace with inflation. Renting eats up savings. And debt is becoming the default, not the exception.

But awareness is a powerful starting point. If you’re in your 20s or 30s and feel like you’re behind, you’re not alone—and you’re not failing. You’re operating within a system that makes it hard to get ahead.

Still, there are things you can do:

• Know your numbers: Understand your total debt and what interest you’re paying.
• Budget with breathing room: Don’t aim for perfection. Aim for visibility.
• Question the pressure to spend: Social media makes it look like everyone’s thriving. They’re not.
• Build an emergency fund slowly: Even £10/week can grow over time.
• Talk about money: Shame thrives in silence. Open conversations help.

And push back against the narrative that says homeownership is the only sign of success. Security can look different now—whether it’s having zero overdraft fees, a healthy emergency fund, or simply making rent each month without borrowing.

Final Thoughts

Negative wealth might be the financial reality for Gen Z and young millennials—but it doesn’t have to define their future. The tide won’t turn overnight, but with more awareness, support, and honest conversations, it’s possible to shift the story.

Debt shouldn’t be a life sentence. And wealth? It should be more than just a number on paper—it should mean stability, choice, and peace of mind.