The No. 1 Thing Holding Gen Z Back From Boosting Their Finances (And 5 Ways They Can Overcome It)
Written by
Jacob Wade
Edited by
Zuri Anderson
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Financial well-being is an important focus on Gen Z. The oldest Gen Zers are around 28 years old, and are starting to become firmly established in their careers. Younger Gen Zers are looking to finish off schooling and get a head start on their finances with good financial habits.
A recent survey from Bank of America shows that 53% of young adults feel that a lack of income is holding them back from achieving financial freedom. So GOBankingRates breaks down exactly why Gen Z is feeling broke, and five ways they can overcome this hurdle and feel financially free.
The No. 1 Money Obstacle for Gen Z
According to the “Better Money Habits” study by Bank of America, 53% of Gen Z respondents stated that they feel they are not making enough money to live the life they want. And living a financially free life includes saving money and investing for the future, according to the survey.
Part of this may be due to economic pressures out of their control. The cost of living significantly increased over the past few years, with inflation affecting the cost of everyday items, and rents and mortgage costs spiking to make housing less affordable than nearly any time in history.
But as a generation just starting their careers, income may remain lower while Gen Z gains experience and begins to get more raises and promotions. While income is low, here are a few things Gen Z can do to feel more financially free.
5 Ways Gen Z Can Overcome a Low Income
Check Bank Account Balances
Before you find ways to boost your income, you’ll need to become familiar with how money comes and goes in your life. This means logging in and checking your bank account balances on the regular. This helps you understand your actual balances and spending and just what you think your balances are.
Checking your accounts regularly can also help you avoid overdraft fees and other unexpected charges. Keeping enough in your account to cover your bills and expenses can help you keep more of your hard-earned money.
Track Spending
In addition to checking your account balances, you’ll want to start tracking your spending on a granular level. This means downloading a budgeting app or building a spreadsheet that you keep updated with your spending. The goal with tracking every penny you spend is to become intimately familiar with the spending decisions you make every day.
With a budgeting app, your transactions will automatically import and show which category you’re spending in. You can run quick reports and find areas where you might be overspending. You might also find hidden fees and charges you didn’t even know about.
Eliminate Waste
After tracking your spending, you might find a few areas of waste in your budget. This can be things like subscriptions you don’t use any more, gym memberships or other recurring charges that you find aren’t worth it any more. Quickly cancel any service or subscription you don’t need until you have more income.
You can also lower some of your fixed expenses by shopping for better rates on your car insurance, cell phone, internet and other services. And being smarter about meal prepping and controlling your restaurant spending can lower your food costs.
The idea is to focus on your true “needs,” and only add in “wants” that you can afford while still being able to save some money.
Build an Emergency Fund
Once you have a budget you can stick to, you’ll want to start setting aside money for an emergency fund. This fund is money that you don’t use except in true emergencies (i.e. job loss, car trouble, etc.).
When you have a low income, saving anything is a win — even just $500. The goal is to eventually grow that into enough to cover one-to-three months’ expenses. So if you live on $4,000 per month, you’d want $4,000 to $12,000 set aside for emergencies.
Having these funds saved gives you peace of mind should a financial emergency occur. It also builds the habit of saving money regularly, which will benefit you as your income rises. Consider putting the emergency funds into a high-yield savings account to earn some interest while you’re saving.
Increase Skills
At the same time you start getting your finances in order, you’ll want to tackle the real issue with feeling behind — your income. There are several ways to increase your income over time, but adding new skills is one of the best ways to earn more quickly.
This might mean taking online classes to learn a new, in-demand skill (such as coding, marketing, or AI tool management). This might also include getting direct experience by taking on freelance work in an area of interest. This might just be focusing on career growth by getting certifications in your field of work, and using that to apply to new jobs that pay more.
Ultimately, growing your income take deduction, consistency and the willingness to learn. You’ll be pushed out of your comfort zone, and may need to sacrifice some nights and weekends to upskill, but it will be worth it in the end.
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