Gen Z, millennials want to invest — but many aren’t, CNBC/Generation Lab survey finds. Here are the issues

Despite earning more, many Gen Z adults and millennials are having a hard time finding room in their budgets to invest.

To that point, 63% of young adults believe the stock market is a great place to build wealth and invest, but many are not participating, according to the latest Youth & Money in the USA poll by CNBC and Generation Lab. In fact, 61% are not saving for retirement each month.

The survey polled 1,013 people ages 18 to 34 in the U.S. in late January.

A prime culprit: higher expenses that have limited their ability to put money aside for savings and investments. Only 11% have enough savings to cover the cost of living for more than a year if they had no income, while 48% cannot cover more than two months’ worth of expenses, according to the report.

“We can’t overlook this,” said Cyrus Beschloss, founder of Generation Lab.

Even though younger adults are earning a bit more than a year ago, they’re having a hard time saving for emergencies and investing in retirement accounts as they grapple with the high cost of living. It’s a major factor the cohort will focus on in the upcoming presidential election season.

“They’re cutting costs, they’re tipping less, they’re trying to spend less eating out … living with parents … they’re not acting like the economy is as good as it is,” Beschloss said.

Most younger adults are making a bit more money than 12 months ago (32%), a lot more (10%) or about the same income (31%), according to the Youth & Money in the USA survey.

However, the “generation doesn’t really have much cash saved up,” said Clifford Cornell, a certified financial planner and associate financial advisor at Bone Fide Wealth in New York.

“That’s very indicative of why more people aren’t saving for retirement, why people want to invest but just generally can’t right now,” he said.

Only 3% say they make enough to be “extremely comfortable” and 18% say they have enough to “live pretty comfortably,” while 38% describe themselves are living paycheck to paycheck.

“They know they need to have cash reserves. They know they need to have a couple of months’ expenses before they start looking to invest in their retirement accounts,” said Cornell.

When asked about their living arrangements, 40% said they live with family while 27% have roommates. Only 13% are living on their own, the poll found.

“They’re making more money, but they’re not really acting or spending like it,” Beschloss said.

The number of young adults still living with their parents is at historic levels due to unaffordable housing costs, according to Susan M. Wachter, a professor of real estate and finance at The Wharton School of the University of Pennsylvania.