Gen Z and Money: Learn the Do’s and Don’ts
Gen Z is the first generation to grow up fully digital. With complete access to modern tools and technologies like smart banking apps and fintech platforms, everything from saving for retirement to investing can be a breeze. But all those options are only worthwhile if you know how to use them—and for that, you need to master the basics of personal finance.
Whether you're starting your first job post-college, managing side hustles, or just trying to make sense of where your dollars go each month, these tips will help you make smart, strategic choices. Let’s walk through the essential do’s and don’ts of personal finance.
Build a realistic budget
Creating a budget is the starting point toward building a solid financial foundation. Though it may sound tedious to do, it’s essential to avoid losing track of your spending. A good budget doesn’t restrict you; instead, it gives you visibility, clarity, and control over your financial decisions.
To start building a budget:
- Tally up your monthly income
- Then add up your regular monthly spending (things like monthly bills or grocery and transportation expenses)
- See how much money you have left when you subtract your spending from your income
Once you have a budget and an idea of your expenses, you can plan accordingly! Fortunately, you can use the 50/30/20 rule as a guide to stick to your budget. Here’s a breakdown:
Categorize your expenses into essentials (like rent, groceries, and bills) and non-essentials (like entertainment or takeout). Then set firm limits for each category based on your average spending and/or intended goals.
Track your finances each week
One of the smartest things you can do is make money check-ins a weekly habit. In only 10-15 minutes, you can quickly assess your financial situation, which can empower you to make the best decisions for your goals.
Look over your spending, check your account balances, and compare your spending to your budget every week (and each time you get a raise or have a big expense). This kind of mindfulness keeps you financially grounded and can prevent small issues from turning into big ones.
It’s even easier with modern tools! Mobile banking apps allow you to set alerts or keep an eye on your transactions—simply download one that works for your needs and start using it regularly. Plus, many online banking platforms let you link your external accounts for better transparency.
Watch out for overspending
We’re in an age of Buy Now, Pay Later (BNPL), subscription services, and instant gratification, so it’s no surprise that overspending has never been easier. There’s no shortage of places to spend your money in digital spaces and everything seems to offer convenience… for a price.
The Wall Street Journal recently noted that Gen Z (ages 18-29) make up the largest group of BNPL users and, unfortunately, are often likely to miss or make late payments. It might be tempting to use a pay-later feature to buy what you want now, but think of how it will impact your finances in the long run.
Chances are, you’re probably using a credit card for your online purchases. Credit cards aren’t to be avoided at all costs. When used responsibly, they can help build your credit score, which you’ll need for major purchases later. That said, avoid maxing out your card and try to keep your usage below 30% of your credit limit.
For subscription services, small charges for convenience add up quickly. Apps like food delivery services often have extra fees, which can turn your $10 quesadilla into $20 with tip. And don’t forget, many subscription services also offer free trial periods and rely on consumers who forget to cancel before the trial expires.
Though Millennials apparently are the biggest users (and spenders) of subscription services, Gen Z subscribers may be paying for services they don’t even remember!
To prevent overpaying for services you don’t use, take a few moments to review your bank statements and credit card bills to highlight any subscriptions—music, food, gym memberships, etc.—and think about what you really use on a daily basis. You could find yourself saving hundreds each year!
Prioritize paying off debt
Student loans, credit card balances, and personal loans can all be significant sources of stress. If you have debts, it’s a good idea to prioritize paying them off as quickly as you can. That’s easier said than done, but there are some specific tricks you can try to make the process smoother.
Pay off little debts first
The “snowball method” is a powerful strategy: pay off your smallest debt first while making minimum payments on the others. Once the smallest debt is gone, apply that freed-up money to the next smallest, and so on. Each paid-off account gives you a motivational boost and builds momentum. This approach is especially helpful if you’re juggling several small balances across different accounts.
Consider debt consolidation strategies
If you’re looking at multiple high-interest debts, you may want to consider debt consolidation. This means combining several debts into one monthly payment, often with a lower interest rate to make it manageable. Some of the best online lenders and banking apps offer these services directly through debt consolidation loans, home equity lines of credit, and other solutions. At Sharonview, your membership comes with resources and guidance from the experts at GreenPath Financial Services.
One of the biggest advantages of our technological age is the access to an incredible range of digital banking tools. From investment apps and credit-tracking platforms, there’s a tool for every financial goal you might have. The key is to match the right tool to every given need.
Set up online bill pay
You’ve tracked your expenses and are following a budget. Now’s a great time to automate some of those recurring payments, so you never forget or incur late fees. Online bill payments are more secure than mailed checks and are easy to set up. Plus, you can program alerts for upcoming payments so you’re never caught off guard.
Download a digital wallet app
It’s becoming increasingly common to make payments via mobile phone, and for good reason. Digital wallets such as Google Pay, Apple Pay, and Samsung Pay offer improved security thanks to the unique encryption code associated with each transaction. There’s also the added convenience of not needing to carry cash or physical cards with you.
Receive payments via direct deposit
Most people receive their paychecks in the form of direct deposits—the electronic transfer of funds directly to their bank accounts—from their employers, allowing them to skip the hassle of physical paystubs. Direct deposit can also be utilized for tax refunds, government benefits, and investment income.
Plan ahead
A recent study of 1,010 Gen Zers noted that only 9% save for emergencies or retirement, but that savings in other categories were strong! Part of staying financially independent is planning for the future, though it can be hard knowing where to start.
Open a savings account for emergencies
Emergencies happen, whether they’re a cracked phone screen, car trouble, or a surprise medical bill. That’s why a separate emergency fund is essential.
Aim for $500 to start, then build up to three to six months’ worth of living expenses to bring yourself peace of mind and plan for the unexpected. As you save your money, look for a High-Yield Savings account with minimal to no fees. These accounts often come with great interest rates that can help your emergency money grow more quickly!
Start saving for retirement with an IRA or 401(k)
Retirement might feel like a lifetime away, but the earlier you start retirement planning, the more you can benefit from compound growth. If your employer offers a 401(k), especially with matching contributions, jump in as soon as you can. If not, consider opening an Individual Retirement Account (IRA) on your own.
The great thing about starting early as a Gen Z saver is that even small contributions of $25 or $50 a month can grow significantly over the decades. And you have the power of automated investing and micro-investment platforms right on your phone.
You’re on your way to financial independence
Financial success isn’t about being rich. It’s about being ready for emergencies and opportunities and making choices that support your values and goals. The more you understand about banking, budgeting, and borrowing, the more control you have over your money and your future. Make smart decisions today, even if they’re small, and you’ll build habits that pay off for a lifetime.