Gen Z are the first true digital natives to grow up with smartphones, social media, and instant access to information, so you’d think they’d be financial masters by now. Gen Z may know how to use TikTok unlike other generations, but it turns out that they actually struggle with managing their money.
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According to a recent survey conducted by The Guardian Life Insurance, only 23% of Gen Z consider themselves to be good financial managers, down from 39% in 2022. Additionally, 67% of these young people consider money to be their most important source of income. about stress in life. With economic instability, high levels of debt and a shortage of jobs, it’s no wonder this generation has a hard time feeling in control of their economy.
Luckily, there are some simple steps Gen Z can take to take back control of their financial future. Read on to discover 5 expert tips to help Gen Z manage finances.
5 tips for Gen Z managing their finances
Managing a household budget takes a little planning, but the end result of experiencing a life of financial abundance is well worth it. Check out our favorite tips below.
Create and maintain a simple budget
Budgeting isn’t always easy, but it’s a great first step for Gen Z looking to start managing their finances. The best part is that there are many great apps on the market that sync your bank account and do all the heavy lifting for you.
“One of the simplest and most effective budgets is the 50/30/20 rule,” says Kendall Mead, CFP and SoFi financial planner. “This rule means spending 50% on essential expenses (rent/mortgage, insurance, minimum debt service, etc.), 30% on discretionary expenses (dining out, entertainment, etc.), and 20% on goals. (retirement, emergency funds, investments, etc.) Even a basic budget can help you reach your financial goals, whether it’s providing a financial cushion, putting in a down payment on your new home, or going on your dream vacation. increase.”
If you’re Gen Z looking for budgeting apps, be sure to check out Mint, YNAB (You Need A Budget), and Wally, which simplify the process and let you see your spending on the go.
For Gen Z struggling to secure their money, there are some creative solutions that can save money automatically and easily.
“The number one tip for achieving financial commitments and goals is to avoid relying solely on willpower and automate as much as possible,” says Meade. “Automate bill payments, savings, and investments. , may prefer to set up a direct deposit.”
boost emergency funds
Many of Gen Z’s current money problems are due to the generation’s inability to recover from the setbacks it endured during the pandemic and the rapid inflation that followed. It is critical that this generation step up emergency funding to regain a solid economic footing.
“Aim to save three to six months’ worth of spending,” Meade said. “This will help us get through the tough times without piling on high-interest debt. It is important to make sure your emergency funds are safe and accessible. I think, but this could be a big mistake.”
use credit cards responsibly
There’s no shame in not knowing how to use a credit card, especially if you’re a Gen Z member and you’re just starting to learn how to manage your money. With that said, don’t treat your credit card like a gift card. Not using this type of card wisely can put your financial future in jeopardy.
“Make sure you pay off your credit card in full every month and don’t leave any balance,” says Mead. “Don’t use your credit card to buy things that you can’t buy without it. It can take a long time and accrue a lot of interest.”
Get personalized help
Seeing financial experts share their top tips on TikTok is priceless, but nothing beats personalized financial advice.
“Nobody expects Gen Z to know everything,” says Derek Sall, founder of Life and My Finance. “When you feel overwhelmed and stressed, it’s okay to seek help from more experienced adults, such as friends, family members, or even professionals. to provide guidance to those who are unsure of their finances.”
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