I’m a Financial Advisor: 3 Tips for Gen Z To Get Through a Recession
Written by
Laura Bogart
Edited by
Kristen Mae
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As one of the most online generations, Gen Z has likely come across a headline or TikTok explainer video about a potential recession. With elite financial institutions like JPMorgan, as well as finance experts with a phone and a selfie stick, predicting continued volatility in the market, it seems like Zoomers would be wise to prepare for a recession.
Unfortunately for Gen X and Millennials, this is far from their first rodeo of economic hardship. Indeed, Millennials can recall being blamed for the last recession due to their troublesome love of avocado toast and lattes. But this would be a first time for Zoomers, though they’ve weathered a slew of other unprecedented events.
While it’s easy to be afraid, it’s smarter to be prepared. GOBankingRates consulted experts to help guide Gen Z through the impacts of a potential recession — and their advice is valuable for all generations.
Look for Safe Places To Store Your Money
Cetin Duransoy, CEO of Raisin, says that, with the uncertainty in the market right now, people are seeking “safe and flexible places to keep their cash.” Americans of all ages are seeing record dips in their investment and retirement funds, and while that is especially scary for people nearing retirement age, it impacts anyone, of any age, with funds in the market.
“Products like high-yield savings accounts and CDs offer a rare mix of stability and meaningful return,” he said. “We’ve seen an 82% rise in registrations on our savings platform over the last two weeks, demonstrating a huge increase in demand for liquid and secure savings. In times like these, liquidity and security are especially important. Cash savings can be a port in the storm.”
Stay the Course With Investing Strategies
When working with Gen Z clients, Michael Rodriguez, CFP®, owner of Equanimity Wealth, has fielded a lot of questions about preparing for a looming recession.
While things seem quite tense, to say the least, in the markets, he encourages them to stick to their current investing strategies as long as they’re able to do so. He also reminds them that their youth presents them with unique opportunities to come out of stormier climates to clearer economic skies.
“Younger investors have an opportunity to take advantage of market downturns since they have a long time horizon in the stock market,” he said.
Be Deliberate About Spending
Though any millennial can tell you that a love of lattes didn’t exactly shatter the global markets, learning to make one at home instead of constantly trekking to your favorite coffee shop can save you money. That’s why Rodriguez also advises his clients to really consider how they’re spending their money and what they can do to save more efficiently — and to be clear, he’s not talking about embracing a completely spartan lifestyle. Instead of getting coffee out everyday, try cutting back to a few times per week.
If you get through your workweek by commiserating with friends at dinner, try local happy hours with discounted prices, or even changing things up to have a night where you and your friends take turns hosting the gang at home.
“When entering a period of uncertainty like the one we are in now, it is important to take inventory of where and what you are spending your money on,” he said. “If you are able to do so, consider finding ways to reduce spending wherever possible.”
This can look like reducing the number of grocery trips you take in a week, preventing the impulse purchases that can happen when you just stop by after work several times a week. Being intentional about spending also involves making small, creative changes to your online shopping strategy.
“Set one day of the week as your designated shopping day. If you add an item to your cart on Monday but only make purchases on Friday, there’s a good chance you’ll realize you don’t need everything sitting in your cart,” he said.
Automate Savings
Devin Miller, CEO and co-founder of Secure Save, knows that a lot of Zoomers are experiencing anxiety about what a recession could mean for them. One of the best ways they can alleviate those fears involves taking a small yet meaningful step — automating your savings into an emergency fund.
He suggests that Zoomers create a dedicated account and funnel money into it with automated deposits directly from their paychecks. This makes the process of saving an out-of-sight, out-of-mind endeavor.
“Don’t stress about starting small. Even $20 to $40 per paycheck can really add up and make you prepared for a small financial setback,” he said. “The most common emergency expenses by far are under $200 — for a new tire, an extra tank of gas, surging price of eggs or other small things.”
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