Gen Z Guide to Financial Management

Gen Z’s Guide to Financial Management 

There is an awful lot of information available on financial management for baby boomers nearing, or in, retirement. And the Millennials get a lot of attention, too. Generation X gets left out, but everyone figures they can fend for themselves. So, who does that leave?

The jury is still out on what years make up Gen Z exactly. Pew Research Center suggests they are anyone born after 1997. Other sites classify them as those born between 1996 and 2010. It’s a huge cohort, currently made up of about 72 million people. In any case, the oldest members of the generation are around the age of 23 or 24 and many are graduating from college, often under crippling student debt, and going out on their own. Those just younger may be starting college, trade school, or trying out other opportunities.

Everyone agrees that it’s essential to start healthy financial habits at a young age, so while everyone’s worried about what the Boomers and Millennials are doing, now is exactly the time for Gen Z to prepare. Here are some things Generation Z can do to start managing their money for the future.

 Start Early

Who is reading this blog post? Are you in Gen Z and still in high school? Then, we commend you on reading a mortgage lending blog for fun. Or maybe you’ve just recently graduated and are looking for ideas to start off right, financially speaking. You could also be the GenX or Millennial parent of a young Gen Z’er. Whatever the case, starting early in financial planning is the healthiest thing anyone can do.

And don’t worry, it’s never too late either. If you’re in your early 20s and looking at your first career, consider how you can save a portion of that paycheck.

 Use Technology

What seems to set apart the financial decisions of older and younger generations is the use of technology. Specifically, apps to help with financial planning and savings. Three that are at the top of our mind are:

• You Need a Budget (YNAB): This app helps you balance your finances in all areas of your life. You create categories, such as rent or entertainment, and every time you add a paycheck you divide it up between these categories. The app tracks your spending and alerts you if you’re taking money from important categories.
• Mint: It’s also a budget tracker, but it offers more. It connects with your account and can provide information and real-time advice about investing to grow your money. It will look at where your money is going and provide suggestions for savings.
• Robinhood: This app is investing may simple. It’s an easy way to better understand all of the possible investments and manage them all in one place. Unlike a lot of more traditional investment brokers, Robinhood has no commission fees.

Learn More

With any of these apps, and really any other financial decision you plan to make, the key is education. The more you know about finances, the better decisions you can make now and in the future. The problem is, traditional education doesn’t always provide the practical aspects of financial health, so you need to do your own homework.

OnTrack WNC is an amazing local program that offers educational opportunities for anyone interested in learning about finances. AB Tech also offers continuing education classes in financial wellness that can help you get off on the right foot.

There isn’t a lot out there specifically for Generation Z, at least not yet, but our quick search of books on Amazon resulted in this guide: Financial Literacy for Generation Z. It’s expensive, but it may be useful. We’re not endorsing it as we haven’t read it ourselves, but we thought it was important to mention. There may be other financial books that would be useful as well.

Make Smart Investments

We already mentioned Robinhood, and that can be a great place to start investing. This article offers several tips for young investors as well, including:

• Learning from others through online message boards.
• Starting with gamified investing tools to learn how to use the stock market.
• Starting young with micro-investing tools.

The article points out that investment is easier than ever and the evolution in the industry is the new normal, not just a passing fad.

Consider Student Loan Debt

One of the biggest concerns for Generation Z will be the impact of student loans. While Millennials have been hit hard with decisions based on student loan debt, from employment to buying a home, it seems like Gen Z may be learning something from their preceding cohort’s experience. Millennials felt pressure to go to the best schools possible, resulting in a high rate of student loans that are nearly impossible to pay off. According to this study, 86% of Gen Z plan to go to college or university but 50% said they’re unwilling to take on huge student loan burdens.

However, that doesn’t mean that student loan debt will simply be erased by the next generation. Among these averages are people who will find themselves in debt and will need to make specific financial decisions to improve their ability to pay back these loans and still achieve the other financial milestones they have in mind.

Control Credit Debt

As is often the case, there are conflicting reports about debt and Gen Z. While they may not be taking on the kind of student loan debt as their predecessors, there are some indications that they may have increased credit card debt.

It could be suggested that the reason these statistics are just hitting the market is because Generation Z is just now old enough to be making financial decisions that include purchases with credit cards and other types of loans. According to USA Today:

“Gen Zers with a mortgage jumped 112%, but from a very low level, increasing to 319,000 from 150,000. The number of Gen Zers taking out auto or personal loans increased about 40% each, according to the report.” And, “Credit cards are the most popular credit product among Gen Zers, with 55% carrying a balance. However, the generation constitutes only about 5% of all the U.S. credit cardholders.”

If you or someone you love is a part of Generation Z, now is the time to get started on financial wellness. To learn more about buying a home and preparing for a mortgage, contact Zachery Adam at GoPrime of West Asheville today.

Do you want to know more about the options you have for your mortgage? Contact Zachery Adam and the team at GoPrime of West Asheville.  Call us today.