Gen Z Is Giving Up on the American Dream: Spending More, Working Less, and Betting on Crypto Instead

When the math stops working, people stop playing the game.

A new study from Northwestern University and University of Chicago researchers has uncovered something troubling about Gen Z’s relationship with the American Dream: they’ve stopped believing in it. And their financial behavior is changing in dramatic ways because of it.

The average age for a first-time homebuyer has jumped to 40, signaling a housing market starved for affordability. A 2024 Harris Poll found that 46% of Gen Z respondents agree with a stark statement: “No matter how hard I work, I will never be able to afford a home I really love.” That’s not pessimism talking—that’s resignation based on math that simply doesn’t add up.

And when an entire generation crosses the psychological threshold where a core life goal becomes genuinely unattainable, their entire financial strategy shifts. The researchers found Gen Z is responding in three distinct ways: spending instead of saving, working less hard, and betting on risky investments like cryptocurrency. It’s not laziness or irresponsibility. It’s rational behavior in an irrational economic situation.

The Great Spending Spree: When Savings Stop Making Sense

The first sign of Gen Z’s surrender appears in their bank accounts—or rather, the lack of money in them.

According to Lee and Yoo’s research, when home prices rise to the point where renters can no longer afford to buy a house within any foreseeable future, they stop trying to save. Instead, they use that money to increase consumption. It sounds counterintuitive until you think about the psychology: if you’re never going to reach your goal no matter how much you scrimp and sacrifice, why not enjoy your money now?

The data backs this up. Nearly half of Gen Z doesn’t even have an emergency fund. A Bankrate survey showed 27% of Gen Z carry more debt than they have in savings. Many find themselves “walking a financial tightrope,” as one finance expert described it, torn between covering immediate expenses or paying for goods on credit instead.

What’s particularly striking is that some of this spending is driven by a false hope. Many Gen Zers expect to inherit from the $124 trillion Great Wealth Transfer. But a Northwestern Mutual survey reveals most won’t receive meaningful windfalls—yet they’re already spending as if they will.

The Work Effort Collapse: Why Climbing the Ladder Feels Pointless

Here’s where the research gets uncomfortable for employers: Gen Z is cutting back on work effort, and it’s not because they’re lazy.

Lee and Yoo found that renters who’ve given up on homeownership report low work effort at nearly twice the rate of homeowners. When asked about the importance of “always giving my best effort” at work, the gap was stark. The researchers describe this as “a reallocation of time and effort by discouraged renters.”

Their logic is simple and brutal: if busting your tail at work won’t get you closer to the financial goal you’ve abandoned, why exhaust yourself? The perceived returns to labor have diminished, so the value placed on maintaining high work effort has too.

But economist Kyla Scanlon offers a different framing: “Maybe it’s not that they don’t want to do anything anymore, but rather they don’t want to do anything in the way that it’s always been done anymore.” Gen Z has lived through three major economic downturns. They’ve watched higher education become a luxury good, witnessed a housing crisis explode the cost of living, and endured political stagnation alongside rapid technological change. From their vantage point, the old playbook was never going to work anyway.

The Crypto Gamble: When You’ve Got Nothing to Lose

The third response is perhaps the most alarming: Gen Z is turning to risky investments, particularly cryptocurrency.

The logic is counterintuitive but psychologically sound. Renters with a plausible path to homeownership tend to be risk-averse—they can’t afford to lose what little they’ve saved. But those who’ve already given up? They perceive they have less to lose, so they’re more willing to engage in high-risk financial behavior.

Research from 2025 shows Gen Z is far more likely to own cryptocurrency than to have a retirement account. They’re over-indexing toward risky assets in ways that worry financial professionals. As one expert put it: “I do get concerned when I see over-indexing toward risky assets.”

What to Watch For

• The generational wealth gap widening as millennials and Gen Z fall further behind in asset accumulation
• Workplace productivity concerns as disengaged workers become the norm rather than the exception
• Crypto market volatility amplified by Gen Z participation without traditional financial safety nets
• Consumer spending patterns shifting toward immediate gratification over long-term savings
• Mental health impacts of financial nihilism and the death of traditionally-defined success

Financial Nihilism Is Here

Kyla Scanlon coined a term that’s capturing how Gen Z actually feels: “financial nihilism.” It’s the phenomenon where younger people question the American Dream itself amid stagnant wages, student loan debt, and corporate dominance. Gen Z has “watched the American Dream rot before their eyes,” she writes, and they’re responding by opting out of the system that promised rewards it can’t deliver.

This isn’t a character flaw. It’s not a moral failing. It’s a rational response to an irrational situation. When the rules of the game are rigged and the goalpost keeps moving, you stop trying to win. You stop saving for a down payment that will never be enough. You stop giving your best effort to a career that won’t pay enough anyway. You take your shot at the lottery instead, because at least the lottery is honest about the odds.

The real question isn’t why Gen Z is behaving this way. The question is: how long can an economy function when an entire generation has decided the deal is off the table?