The oldest members of Gen Z are now 24 years old. And even though many Gen Zers have just recently entered the workforce, the majority are already falling behind financially. A recent survey conducted by OnePoll on behalf of Life Happens, a nonprofit educating consumers about the importance of life insurance, found that 54% of Gen Z respondents said they’re planning to delay life milestones like getting married and having kids due to a lack of financial stability.
Read More: What Gen Z Can Learn From Millennials’ Money Mistakes
Their Impact on Money: Gen Z: The Future of Finances
But because they’re young, Gen Z has plenty of time to get back on track — or make sure they never get off financial track to begin with.
Get a Clear Picture of Your Finances
The first step in any financial plan is being fully aware of your current circumstances.
“That means make a list of what you own (your assets), what you owe (your liabilities) and what financial products you currently have,” said Faisa Stafford, president and CEO of Life Happens. “Regardless of if you’re still in college or new to the workforce, this will help you assess your current financial health and chart a path to reach your financial goals. These goals can be for both the long-term and short-term — for instance, you may want to set up a budget, set up a savings plan for income you earn at a summer job or create a payment plan for your student loan debt.”
Build Up an Emergency Fund
Saving up in an emergency fund should be a top financial priority for Gen Z.
“This is the money you set aside for when life throws you an unexpected curveball and the dishwasher unexpectedly needs to be replaced or the car needs major repairs,” Stafford said. “Don’t feel bad if you don’t have that much saved, or any at all — starting when you’re young is the best way to build this safety net.”
“While the rule of thumb is three to six months of expenses, every dollar you put away helps,” she continued. “I’d even recommend putting that money in a separate account and keep building it up in case you need it during a life transition, such as switching jobs, changing apartments, graduating or moving to a new city.”
Consider setting up automatic transfers from your checking account to your savings account so you can build up an emergency fund effortlessly.
Purchase Life and Disability Insurance
“The best time to buy critical financial products, like life insurance, is when you’re young and healthy to lock in a more affordable rate,” Stafford said. “Life insurance and disability insurance are inexpensive ways to gain greater protection and can be bought easily online from your home. And it’s actually a lot more affordable than you think. A $250,000 level-term life insurance policy for a healthy 20-year-old can be as little as $13 a month. That’s the same price as your Netflix subscription or a few coffees, meaning it’s easy to work into any financial plan.”
Meet With a Financial Professional
You’re never too young to start financial planning, and meeting with professionals in the field can be an invaluable resource when you are just starting out.
“This may feel like a big step, but we’re actually seeing a lot of young people setting up meetings with financial professionals for the first time – commonly this is a financial professional their parents may be using,” Stafford said. “But don’t be afraid to ‘shop around’ for a professional who will better understand your needs. A call with a financial professional can eliminate unanswered questions and alleviate any stress you may feel about financial planning.”
Review Your Budget
“Everyone needs an understanding of how much they’re earning, how much they’re spending and how much they’re going to need to meet their current and future financial goals,” Stafford said.
Work with a financial professional to create a budget that works for you, or use online budgeting tools or apps to figure out your ideal cash flow.
Make a Plan To Pay Down Debt
Many Gen Zers have taken on student loan debt, and may also have other debt including credit card debt and car loans. Be sure to include a plan for paying down this debt when figuring out your monthly budget.
Start Saving for Retirement
Even though retirement seems far away, it’s important to start saving for it ASAP.
“Definitely take advantage of any matching funds your employer makes to your 401(k) contributions,” Stafford said. “That is like ‘free’ money you don’t want to miss out on.”
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