Most Gen Zers Say They’re Not Good at Managing Finances: 5 Tips To Help
Written by
Madeline Duley
Edited by
Gary Dudak
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As Gen Z is the first truly digitally native generation that grew up with smartphones, social media and instant access to information, you’d think that they’d be financial wizards by now. Well, it turns out that while Gen Z might know how to navigate TikTok like no other generation, they’re actually struggling to manage their money.
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According to a recent study conducted by Guardian Life Insurance, a mere 23% of Gen Z consider themselves to be very good at managing finances — down from 39% in 2022. Additionally, 67% of these young people find money to be a top source of stress in their lives. With economic instability, high levels of debt and job scarcity, it’s no wonder this generation is struggling to feel in control when it comes to their finances.
Fortunately, there are some simple steps Gen Z can take to regain control of their financial future. Keep reading to find out five expert tips to help Gen Z manage their finances.
5 Tips for Gen Z To Manage Their Finances
Managing finances takes a little bit of planning, but the end result of experiencing financial well-being is totally worth it. Check out our favorite tips below.
Create and Maintain a Simple Budget
Budgeting isn’t always easy, but it is a great first step for Gen Zers who want to start managing their finances. The best part is there are tons of amazing apps on the market that can sync to your bank account and do all the heavy lifting for you.
“One of the most simple and effective budgets is the 50/30/20 rule,” said Kendall Meade, CFP and a financial planner at SoFi. “With this rule, you should be spending 50% on essential expenses (rent/mortgage, insurance, minimum debt payments, etc.), 30% on discretionary expenses (dining out, entertainment, etc.) and 20% on your goals (retirement, emergency funds, investing, etc.). Even a basic budget can help you reach your financial goals, whether it’s to have a financial cushion, put a down payment on a new home, go on your dream vacation or all of the above.”
If you’re a Gen Zer looking for a budgeting app, be sure to check out Mint, YNAB (You Need A Budget) and Wally to simplify the process and allow you to check on your spending from on the go.
Automate
For Gen Zers struggling to set aside money, there are some creative solutions that can make saving money automatic and effortless.
“The biggest tip I have to stick to your financial resolutions or goals is to automate wherever possible so that you are not relying on willpower alone,” Meade said. “Automate your bill payments, savings and investments. For people who find that they struggle with spending for example, they may prefer to set up direct deposit so that a portion of their paycheck goes directly to savings, removing the temptation to spend the money instead.”
Beef Up Your Emergency Fund
Many of the money issues Gen Z is currently facing are due to the setbacks this generation endured during the pandemic that they haven’t been able to recover from and the steep period of inflation that followed. In order to regain some sure financial footing, it’s crucial for this generation to beef up their emergency fund.
“Aim to save for 3-6 months’ worth of expenses,” Meade said. “This can help you get through tough times without having to rack up high-interest-rate debt. It is important to make sure your emergency fund is safe and accessible. Many people are tempted to invest their emergency fund, but this can be a big mistake.”
Use Credit Cards Responsibly
There’s no shame in not knowing how to use a credit card, especially if you are a member of Gen Z and just starting to learn about money management. That being said, don’t treat your credit card like a gift card. If you aren’t using this type of card wisely you might be endangering your financial future.
“Make sure to pay off your credit cards in full each month so that you aren’t carrying a balance whenever possible,” Meade said. “Don’t use credit cards to purchase anything that you would otherwise be unable to afford. Credit cards can have very high-interest rates and sometimes, if you are just making minimum payments, it can take a very long time to pay off this debt, potentially costing you a significant amount of interest.”
Get Personalized Help
As valuable as it is to watch financial experts share their top tips in TikTok, nothing beats individualized financial advice.
“No one expects Gen Z to know everything,” said Derek Sall, founder of Life And My Finances. “When feeling overwhelmed and stressed, it’s okay to ask for help from more experienced adults, such as friends and family or even professionals. Financial planners, accountants or advisors can create personalized financial plans and provide guidance to those who are unsure about their finances.”
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