Black tax? Gen-Z has other plans

Kenya's Gen-Zs, unlike Millennials, have refused to pay black tax; instead, they are saving for retirement. 

A new study reveals that Millennials could be the last generation to support parents and other dependents.

The study revealed that the sandwich generation suffers a constrained income as a result of supporting dependents. 

And while Gen-Zers are saving for retirement, to start businesses and own homes, Millennials are falling behind on rent and other bills.

“Gen Zs will not take care of you. Your kids who are coming up, they will be focusing on their own issues,” Japheth Ogallo, Managing Director, Old Mutual General Insurance, said.

The report has outlined that Kenyans are highly indebted, despite having multiple incomes, limiting them from prospering financially.

Further, the sandwich generation is financially vulnerable due to financial dependence. “Millennials have a high cohort of people who are taking care of others financially”.

Typically, the sandwich generation, also millennials, refers to middle-aged adults, in their 40s and 50s, who care for their ageing parents and their own children. The group is sandwiched between the physical, emotional, and financial needs of two different generations.

The report has shown that 46 per cent of working Kenyans are poor managers of finances, exceeding monthly budgets, and more than half are in debt.

And despite changing attitudes towards supporting parents and relatives, the report shows that 44 per cent of older Kenyans in the workforce expect their children to look after them in old age.

At the same time, 26 per cent of Gen-Zs in the workforce, formally and informally, are saving for their own retirement, to own a home, fund existing business and for education.

However, more men than women are saving for retirement, with 37 per cent of Kenyans saving for retirement.

Working Kenyans are moving to cheaper rental properties, switching to cheaper brands and changing cell phone packages to manage their expenses.

To adapt to financial pressure, Kenyans are adapting to lifestyle changes. With Gen Zs moving to cheaper properties, as Kenyans are falling behind on rent.

Kenyans aged 50 to 59 years are moving their children to cheaper schools to keep up with financial pressures. Further, some have cut down on house help, moved from the city to the rural area and delayed vacation, among others.

It has also shown a new trend that some Kenyans delayed medical procedures due to financial strain in the reporting period.

“Gen Z’s are not compromising on phones and data options,” the Old Mutual Financial wellness report has shown, as older generations switch to cheaper brands.

In the report, 32 per cent of women who are dependents are single mothers.

Ninety-three per cent of millennials under study have dependents, while only 39 per cent of Gen-Zs are supporting family and other dependents.

The report shows that 80 per cent of those who depend on their relatives are women, while 63 per cent are men.

Forty-six per cent of working Kenyans are part of the sandwich generation. Adult dependents have increased by 4 per cent in 2025. “The financially supported adults mostly include parents (79 per cent) and siblings (49 per cent),” Report.

Generally, 2 in 10 working Kenyans receive money from friends or family. Highlighting the significant role that Kenyans continue to play in supporting and being supported by others financially.

Despite efforts to accept more responsibility for spending and how to invest for the future, 43 per cent of working Kenyans are still considerably financially stressed, and 44 per cent of Kenyans feel that financial stress is badly affecting their mental and physical health.

The report has shown a correlation between financial dependence and financial stress, with Gen-Zs experiencing less stress when compared to the 50+ year olds, who experienced increased stress. More women than men felt financial stress.

However, when compared to the previous year, women’s financial stress had considerably declined.

According to Martin Karenju, Old Mutual Life Assurance, Managing Director, the stress levels for women fell as they are trying to be more resourceful.

“Women are more part of savings groups, so they are getting support and tapping into those savings groups, and that's helping them to ease their stress levels,” said Karenju.

The Gen-Zs have, however, been found to overspend, despite efforts to stay disciplined, possibly because they still face some unexpected expenses due to their life stage. Millennials and older generations, however, hardly spend beyond their budgets.

About 30 per cent of Kenyans have a bit of money to spare at the end of the month after expenses, while 4o per cent have taken out a loan for day-to-day expenses.

14 per cent of Kenyans are left without any cash after paying monthly expenses.

Kenyans aged 50 years and above are taking loans to pay school fees, and the majority of Gen-Zs and millennials are taking loans to pay everyday expenses.

The report has shown that mobile loans continue to be the most widely used form of credit, followed by personal loans from Chamas. Personal loans from financial institutions have increased compared to 2024.

In the report, Financial Wellness, social media usage increased in the past year, with the strongest growth for TikTok. Despite the growth, the report has revealed that Social media as an income stream is still largely underdeveloped in Kenya.