4 Ways for Gen Z To Become Super Savers
Written by
Jordan Rosenfeld
Edited by
Zuri Anderson
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While headlines often focus on Gen Z’s financial challenges, this generation may be better poised than most to build long-term wealth. With early access to financial tools and education–and decades ahead of them to save and invest–Gen Z has the potential to become super savers.
Lawrence “Larry” Divers, a certified retirement plan professional (CRPP) and accredited investment Fiduciary (AIF) at Cannon Financial Institute, offered tips to help Gen Zers maximize their saving power.
Automatic Contributions to Retirement Plans
Divers isn’t overly concerned about Gen Zers’ savings habits, especially with recent policy changes working in their favor.
Under the SECURE 2.0 Act, many employees will be automatically enrolled in 401(k) or 403(b) plans with contributions that gradually increase — making it easier to build savings over time.
“They’re younger and since they have a default enrollment and contribution limitations go up based upon age, if they keep doing that over time and even increase the contribution slightly, they’ll be in great shape when they get to retirement age,” he said.
Roth IRAs
Divers is a strong advocate for Roth IRAs, especially for Gen Zers in lower tax brackets. Contributions are made with after-tax dollars, but the earnings grow, and can be withdrawn, tax-free.
“Not only are the earnings tax-free, if [the funds] are in there for five or more years, you’re not going to get a penalty if you take it out,” he said.
That flexibility makes Roth IRAs a good option not only for retirement, but also for other major goals like buying a first home. In contrast, withdrawals from traditional IRAs are taxed and may come with penalties.
“So why not save tax-free early on?” he added.
Micro-Investing Apps
Gen Z’s comfort with technology also gives them an edge when it comes to investing. Divers pointed to platforms like Acorns and Robinhood, which allow users to invest small amounts in fractional shares with lower risk and less capital required.
“They’re more tech-oriented,” he said, and many are using apps to build wealth in a more accessible way.
He referenced a study showing that 39% of 23-year-olds own stock today, compared to just 31% of 20-year-olds back in 2007.
Saving With the Bucket Approach
Divers also recommends the “bucket approach” to savings: Dividing funds into separate categories for different goals. This helps Gen Zers plan for both the unexpected and the future.
He believes many Gen Zers are more financially aware than they’re given credit for: “They’ve actually figured it out, and they know they have debt. But they said we need something in case of an emergency.”
He recommended the following buckets:
- Emergency fund: Set aside three to six months of expenses in a money market or certificate of deposit (CD) for easy access. “In case something happens… like we saw with COVID and all of a sudden everything shuts down on them,” Divers said.
- Debt payoff: Many Gen Zers are focused on paying down debt early, which can free up money for investing later.
- Personal savings: This could be in a high-yield savings or money market account for flexibility, liquidity, and a slightly better return than traditional savings.
- Next goals bucket: Save toward major milestones like a home purchase, future children’s education costs or investment capital. Consider both short- and long-term goals.
- Retirement: Keep building through employer-sponsored plans or IRAs to ensure long-term security.
By starting early and using the right tools and strategies, Gen Z has a powerful opportunity to build lasting financial security.
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