Often dismissed as being glued to their phones or mesmerized by their gaming consoles, members of Generation Z — those born after 1997 — have money on their minds. In fact, 72% of them report feeling stressed about money, according to the 2019 Future of Money Study.
Personal finances can seem overwhelming to this generation, but they don’t have to be. Taking the time to fully understand their financial situation and setting realistic goals will help young adults build confidence — and have fun — with their money. Members of Generation Z should focus on these financial resolutions:
Create (and Follow) a Budget
Hands down, the most recommended financial tool is a budget. To budget effectively, you need a complete picture of what’s going out and what’s coming in. Track every expense – down to the penny – for 30 days to get a realistic sense of spending. Use this information to allot how much money should go toward each budget category, noting your personal goals such as building an emergency fund or paying off debt. You can use a good ole spreadsheet or variety of mobile apps.
Find the Right Student Loan Repayment Plan
Recent college grads will likely have to start thinking about paying back student loans. Federal student loan borrowers are automatically assigned to a standard repayment plan, which may not be the best solution. Graduates need to identify the right repayment option for their individual circumstances – typically an income-driven plan that’s more manageable. Our Student Loan Counseling provides much-needed guidance.
Build an Emergency Fund
An emergency fund serves as a buffer between you and credit card debt, reserving funds that are solely for emergencies, such as car repairs or medical expenses. We recommend saving three to six months’ worth of monthly expenses in a liquid savings account. That might seem difficult, but saving about $20 a week for a year will net you $1,000 – a big boost to that fund.
Start Retirement Savings
If you have access to a 401(k), be sure to sign up and start saving. Your age is a huge asset when it comes to retirement — take advantage of your youth and start early. If you don’t have a 401(k), consider opening an IRA. Contributing just $25-$50 a month will pay dividends down the road.
Free Yourself from FOMO
Social media makes it way too easy to feel like you need to keep up with your peers — or even celebrities. Be careful about who you follow and if you’re constantly feeling like you need to buy or do something to match what you see, change your social media habits. Focus on your goals and financial future, not anyone else’s.