Success in our modern world is often determined by self-esteem: the high bank balance, the prestigious job title, or the picturesque life posted all over social media. Gen Zers are constantly exposed to a barrage of perceived success and to ongoing economic hurdles, which significantly affect their mental well-being. This fear of becoming poor is somewhat universal. While it currently lacks clinical recognition in medical or psychological literature, “peniaphobia” has rapidly become the definition for the anxiety it brings. The term “peniaphobia” describes an intense, consuming fear of poverty and represents something very real: the crushing financial anxiety that has become embedded in Gen Z’s psyches.
The word derives from Greek roots meaning“poverty” and“fear” and reflects documented financial stress that researchers have linked to severe mental health consequences. For Gen Z, this anxiety has morphed beyond ordinary financial concerns. It has become an all-consuming dread that shapes daily decisions, damages well-being, and fundamentally alters how this generation approaches adulthood.
Economic Reality Fuels the Fear
The economic fragility of the current age became vividly apparent during the COVID-19 pandemic. Many workers lost their jobs, and many never returned to them after the pandemic was over. Gen Zers were entering the workforce during this period. They entered into a contentious job market with increasing food prices, and rent has exponentially risen since the end of the pandemic.
According to the Federal Reserve Economic Data, Gen Z unemployment stood at 10.5% as of August 2025, compared with 4.3% overall. This gap now demonstrates that young people struggle more than twice as hard to secure employment, even with a degree. Among recent college graduates, data indicate that unemployment rates are now comparable to those of peers who never attended higher education. Four-year degrees no longer guarantee employment, leaving 4.3 million Gen Z classified as NEETs (not in employment, education, or training).
Student Loans and Housing Costs
While unemployment among Gen Zers is rising, so is student loan debt interest. This further compounds the financial burden and subsequently leads to psychological turmoil. The average Gen Z student loan stands at about $22,948 in debt. This debt also accrues interest at an annual rate of 6.72%, growing faster than that of any other generation. Roughly 13 million Gen Zers carry student loans, which is 43.5% of all Gen Z adults overall. Once inflation is accounted for, current Gen Z student loan debts would stand 13% higher than those of millennials owed at the same age.
Another driving factor of peniaphobia amongst Gen Zers is rapidly increasing housing costs. Roughly 70% (7 out of 10) of Gen Z and millennial renters report struggling to make rent each month, driving up their fear of financial ruin. The cost of housing, particularly in the U.S., has risen significantly faster than wages. This inequality and further economic pressure from unexpected expenditure (hospital emergencies or car issues) make stable housing practically unattainable for Gen Zers. About 63% of Gen Zers report struggling to afford groceries, while 74% believe that they are one minor emergency away from certain financial ruin.
Social Media Amplifies Financial Inadequacy
On top of current economic conditions, social media amplifies financial anxiety in Gen Zers through constant comparison. Platforms like Instagram, TikTok, and Snapchat expose young people to curated and distorted views and perceptions of what financial success is. Gen Zers are constantly bombarded with unrealistic standards of success, from luxurious vacations to expensive fashion, which leads to Gen Zers developing feelings of inadequacy and incompetence.
A TD Bank survey involving more than 500 Gen Z Canadians (aged 18-28) revealed that 53% of the 500 questioned felt compelled to portray a successful image on social media platforms. 65% of the Gen Zers believed they were being left behind financially compared to their peers, while 66% felt financial pressure to hit financial goals such as purchasing a house by a particular age.
Social media also negatively impacts the younger generations’ buying habits. 40% of Gen Z regularly take on debt for impulsive purchases of items or experiences they saw on social media. 67% percent of Gen Z admit to going into debt due to FOMO (fear of missing out). 57% have made financial decisions based on social media content, and 73% say it has changed how they spend or save.
The pressure to document every moment and experience on social media has created what researchers call the “FOMO economy.” Gen Zers feel they must share all aspects of their daily lives to present this “perfect”, fulfilling life to other users and their peers. They will share their breakfasts, lunches, dinners, side hustles, weekend plans, vacations, friends, and partners to paint an image of success.
The Hustle Culture Trap
Gen Z has begun embracing the side hustle culture in response to their financial and job insecurities. Side hustles or gigs were initially meant to help supplement your primary income, acquire savings, or pay off debts. However, Gen Z is taking up side gigs as a secondary job to resolve their financial crisis, which presents new problems to an already unstable economic environment.
According to the Ernst & Young LLP (EY US) 2023 Gen Z Segmentation Study, Gen Zers growing money concerns and significant distrust of big corporations have fuelled their anxieties to an all-time high. 65% of Gen Zers reported working part-time or full-time jobs last year, while 56% earned money from freelance or side hustle work. 39% worked both a regular job and a side hustle simultaneously. This juggling act stems from pragmatic necessity rather than entrepreneurial ambition. Gen Z normalizes working multiple jobs to hedge against an uncertain future.
The mental health consequences of this hustle culture are severe. 67% of those working side hustles report feeling burned out, with Gen Z experiencing the highest rates at 73%. 41% say their side hustle impacts sleep, while 33% report it has wrecked their mental health and mood. Twenty-two percent admit that side hustle work strains their relationships.
The irony is that working multiple jobs often fails to provide the financial security Gen Z seeks. Many remain living paycheck to paycheck despite exhausting themselves through constant work. Meanwhile, the time and energy consumed by side hustles prevent investment in other aspects of well-being that might provide genuine security and satisfaction.
Mental Health Consequences Create a Vicious Cycle
Research shows that approximately 5.8 million young adults in the United States report being under significant financial distress, an alarming 17% of this population. This subsequently has had devastating psychological impacts on Gen Zers, with 56% of young adults identifying financial stressors negatively impacting their mental health. This stress then manifests as anxiety, depression, mood swings, trouble sleeping, constant overthinking about spending, comparing oneself to others who have more money, relationship problems, social withdrawal, and even suicidal thoughts.
Mental illness affects financial situations through reduced productivity, loss of employment, and increased health expenditure. People living in poverty face heightened stress, social exclusion, decreased social capital, and increased violence and trauma that lead to common mental disorders. Young adulthood is a particularly vulnerable period, as individuals transition from education to employment while relationships and social support shape their identity.
This vicious cycle perpetuates itself because financial stress drives behaviors that worsen financial situations. People may avoid looking at bank statements, make impulsive purchases to cope with anxiety, or become paralyzed by fear and fail to take necessary financial actions. These avoidance behaviors then create additional financial problems that fuel more stress.
When Money Becomes Identity
Gen Zers increasingly equate their value as human beings with their bank account balances, creating psychological damage beyond just monetary concerns. Research on Financial Contingency of Self-Worth shows that basing self-worth on financial success predicts more financial social comparisons, financial hassles, stress, anxiety, and less autonomy. When people’s self-esteem depends on financial achievement, they experience less autonomy, perceive financial problems more negatively, and disengage from financial challenges when threatened.
This identity crisis manifests through constant comparison. 69% rate their current financial situation as only “fair” or worse, with 32% rating their finances as poor or very poor. These self-assessments often reflect social comparison rather than objective financial status. Young people measure themselves against curated social media presentations rather than realistic benchmarks.
The psychological weight of tying identity to finances creates shame that prevents people from seeking help or discussing money problems. Many avoid conversations about financial struggles even with close friends, creating isolation that makes stress worse. Dating becomes fraught with anxiety about affording activities or appearing financially unsuccessful. Friend groups revolve around expensive activities that create pressure to spend beyond means or risk social exclusion.
This conflation of money and self-worth means financial setbacks feel like personal failures rather than common economic challenges. Young adults who lose jobs or cannot pay bills experience not just practical stress but existential crises about their value as people. Breaking this connection requires deliberate effort to separate financial circumstances from personal worth.
Evidence-Based Solutions: Cognitive Behavioral Therapy
Mental health professionals have developed effective interventions for financial anxiety that address both practical money management and underlying psychological patterns. Cognitive Behavioral Therapy stands as the most powerful tool for tackling financial stress.
CBT works by identifying automatic negative thoughts that appear whenever people think about finances. Thoughts like “I’ll never get out of debt” or “I’m terrible with money” fuel anxiety rather than solving problems. Instead of letting these thoughts control behavior, CBT helps examine them objectively and replace them with balanced perspectives.
Key CBT techniques for financial anxiety include thought records, which document anxious money thoughts and challenge their accuracy. Worry time involves setting aside a dedicated 20-to 30-minute period each day to focus on financial concerns rather than letting them hijack entire days. Exposure exercises gradually help people face feared financial activities like checking account balances or opening bills. Behavioral experiments test money beliefs through real-world actions, collecting evidence that challenges unhelpful assumptions.
The magic of CBT lies in breaking connections between negative thoughts, emotions, and behaviors that keep people trapped in financial anxiety. This process often reveals core beliefs about money formed during childhood, providing insights that transform relationships with finances. Unlike some therapeutic approaches, CBT offers concrete, practical strategies people can use immediately to reduce anxiety.
Research demonstrates CBT’s effectiveness for financial stress. An online CBT intervention called “Space from Money Worries” showed improvements in mental health, perceived financial well-being, and a reduced relationship between financial difficulties and poor mental health. The intervention addressed psychological mechanisms underlying relationships between poor mental health and financial difficulties.
Building Financial Literacy and Practical Skills
While therapy addresses psychological components of financial anxiety, practical financial education provides tools for managing money effectively. Gen Z needs both emotional support and concrete skills to build sustainable financial health.
45% of Gen Z do not receive formal financial education until adulthood, leaving them unprepared for financial responsibilities. This gap matters particularly given significant economic headwinds including rising tuition, shifting job markets, and lasting inflation impact. However, encouraging signs exist. Gen Z is the generation most likely to have taken personal finance courses in high school, with 30 states now requiring semester-long, standalone personal finance courses before graduation, up from 17 in 2022.
Foundational money skills like budgeting and understanding credit remain essential yet widely under-taught. Gen Z particularly needs education on topics including managing day-to-day spending, credit and credit history, saving and planning for college debt, getting jobs and managing money, renting homes, buying homes, mortgages, investing in vehicles and large purchases, and responsible credit habits like paying bills on time.
Financial literacy programs must meet Gen Z where they are. Digital tools, mobile-friendly content, and conversational language speak directly to this generation’s early career financial needs. Short, engaging formats work better than lengthy workshops. Programs teaching through real-world simulations using actual financial tools like TurboTax and QuickBooks build confidence faster than abstract lessons.
How Employers Can Help Through Financial Wellness Programs
84% of Gen Z agree it is important for employers to offer financial wellness programs. Beyond health and retirement savings programs, Gen Z values initiatives teaching general financial literacy, managing debt, saving for retirement, and budgeting. The most important aspects of financial wellness programs, according to respondents, include financial education workshops and seminars (32%), financial coaching and counseling services (26%), and financial management tools for budgeting and tracking spending (19%).
Only 28% of employers currently offer financial wellness programs, marking a clear opportunity to stand out and address Gen Z’s needs. 92% of Gen Z employees report being more likely to stay with companies that offer financial wellness benefits, indicating that these programs serve as strategic retention levers.
Effective employer interventions include emergency savings programs, as living paycheck to paycheck remains a reality for more than half of Gen Z workers. Employers offering emergency savings tools like payroll-linked accounts or matched contributions directly reduce anxiety while building trust. Student loan repayment assistance demonstrates that employers understand the financial pressures employees face and show a willingness to help.
Personalized budgeting tools through apps and digital platforms that help employees manage day-to-day and monthly expenses boost financial literacy and confidence. Accessible financial education using short, engaging, mobile-friendly content speaks directly to Gen Z’s needs. Financial counseling, mental health support, retirement savings plans, and other programs improve financial wellness beyond just paychecks.
Financial wellness programs reduce turnover, enhance productivity, and foster loyalty. Workers enrolled in wellness initiatives report significantly lower financial, emotional, and physical stress. Beyond altruism, these programs offer tangible benefits that improve company performance while helping employees build healthier relationships with money.
Conclusion
Perhaps Gen Z’s intense focus on financial security ultimately proves adaptive rather than pathological. This generation witnessed the 2008 financial crisis, experienced a global pandemic, and confronted climate change and political instability through constant social media updates. Their heightened financial awareness may represent a rational response to genuinely precarious circumstances rather than irrational fear.
True wealth encompasses more than money. It includes strong relationships, physical and mental health, meaningful work, personal growth, and contribution to communities. When Gen Z can pursue financial stability while maintaining a connection to these broader sources of well-being, they build lives characterized by genuine security rather than constant fear.
The viral spread of “peniaphobia” or its sentiment across social media should alarm every generation. While the term itself may be informal, the phenomenon it describes demands serious attention from mental health professionals, employers, educators, and policymakers. Only through comprehensive, multi-level interventions can society help Gen Z build healthy relationships with money that support, rather than undermine, their well-being.
