If there’s anything that millennials have proved, it’s that we know a thing or two about money. With the rise of the gig economy, mobile banking and investing apps, and personal finance blogs, Gen Y has also shown that we can be pretty savvy with our finances.
But now it’s time to pass the torch to Generation Z. Here are 15 financial tips from millennials to Generation Z because we all know you’re going to have tighter budgets and more debt than us!
| Takeaways |
|---|
| 1. Budgeting is key to financial success for both millennials and Generation Z. |
| 2. Millennials can share insights on managing student loans and debt. |
| 3. Generation Z can learn from millennials’ experiences with investing and saving. |
| 4. Tech-savvy approaches to financial literacy can benefit Generation Z. |
| 5. Seeking advice from financial experts can help Generation Z make informed decisions about money. |
| 6. Both generations can benefit from understanding long-term planning and building an emergency fund. |
| 7. Millennials can offer tips on managing finances while balancing family responsibilities. |
| 8. Generation Z can gain insights from millennials’ experiences with managing financial challenges and economic uncertainties. |
1. Paying Off Your Debt Is A Priority
Paying off debt is a long-term goal for you, and it should be a priority for Generation Z too.
Millennials need to know that paying off their debt is something that they should prioritize over saving money or paying down other expenses.
If you’re having trouble getting out of debt, it might be time to look into consolidating your student loans or refinancing them at a lower interest rate.
Generation Z is just starting in life, so they don’t have much experience managing their finances yet but if they keep putting saving money ahead of paying down their credit card balances and student loans (which millennials often did).
Then they’ll only make things worse for themselves in the long run by increasing the total amount owed on those accounts.
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2. Investing Early And Often Is Key
You can’t expect to make money in the stock market if you don’t invest at all.
The earlier you start investing, the longer your money has to grow. The power of compounding interest can be amazing: even small amounts invested over a long period will add up quickly.
So even if an investment doesn’t do well one year or even five years out, it still has a chance to succeed if given enough time.
And while some people may be nervous about putting their money into something as risky as stocks (and they shouldn’t ignore that risk).
Most studies show that young people who invest regularly are more likely than those who don’t invest at all or invest in risky products like penny stocks or day trading software packages
3. It’s All About The Hustle
If you’ve ever been around a Millennial, you know they love to talk about their hustle. They have a strong work ethic and are more likely to get a job than Gen Z., according to an article by Forbes, Millennials are twice as likely as Gen Zers to work multiple jobs.
And when they’re not working? Many of them are still hustling on side projects or for free for startups and small businesses. If there’s one thing we can learn from our young counterparts’ ambition and drive.
It’s that no matter how much money we make or how much time off you take from your day job (or lack thereof), financial independence is something worth striving for every day of the week even if it takes longer than expected!
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4. You Can Fund Your Side Hustle
You may have heard that gig economy jobs are the future of work.
And it’s true: platforms like Uber and Lyft have made it easier than ever to make money on the side, and new sites like Airbnb allow you to monetize your home in a way that would have been unheard of just a decade ago.
But many people still view these kinds of gigs as “side hustles,” which implies they aren’t as important or long-lasting as full-time work.
The reality is that with platforms like SaveUp and Acorns, you can use those extra bucks from these part-time gigs to help fund your retirement and even take advantage of tax breaks when you do so!
5. You Can Live Without A Credit Card And You’re Better Off Without One
To show you how easy it is to live without a credit card, I want to share a personal story.
I was about twenty years old when my dad told me he thought it would be a good idea for me to get my credit card.
He had reasoned that if I didn’t already have any credit history established by the time I graduated from college and started looking for loans or apartments on my own, then having a bank account with a debit card wouldn’t be enough evidence of financial responsibility.
So he took me down to our local bank branch in Manhattan and opened up an account in his name where they issued me my first ever piece of plastic.
Which was more exciting than anything else because it meant we could go shopping together (shopping being one of those activities dads love doing with their kids).
His reasoning seemed logical at first glance: Having access to extra money whenever needed would make life easier; maybe even help build up some savings over time? But as years went by, something began eating away at me:
I felt like everything was happening too fast like there wasn’t enough time for things like planning or thinking through consequences before diving headfirst into whatever situation seemed most pressing at the moment. And once again…this wasn’t entirely true either!
6. Don’t Underestimate The Power Of Compound Interest
Compound interest is a simple idea that can make a big difference to your savings, but it’s one of the most overlooked concepts in personal finance. It’s not just for old people; it’s something you should start using right now.
As you know, compound interest occurs when money earns interest on top of its original amount. So if you have $1,000 and leave it sitting in an account earning 5% interest per year, after one year you’ll have $1,050 ($1000 + 5%).
Next year, assuming the same rate of return and no additional contributions from you or anyone else (which would complicate things), your balance will be $1125: $1050 from last year plus another contribution of $75 (5% x $1050).
After yet another year passes with no change in input variables (i.e., still earning 5%, still contributing nothing), what will your balance be? How much more than the second full year did the first full cycle earn?
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7. Traditional Retirement Looks Different These Days
The traditional retirement, complete with a beach house and golf cart, is something that has largely been out of reach for millennials.
According to Fidelity Investments, the average 401(k) balance for someone nearing retirement age is $304,100. That’s not enough to cover even one year of expenses in most places.
But this isn’t all on you. The financial industry hasn’t helped either: They created products like variable annuities that made money off your ignorance and then shoved them down your throats whether or not you wanted them or understood what they were all about.
They also sold fixed indexed annuities (FIAs), which are complex products that have fallen out of favor over the last few years because they charge high fees without providing much benefit to investors who don’t have time horizons longer than 10 years or so.
And millennials tend not to have those kinds of long-term investment horizons thanks in part to student loan debt and low wages.
8. Your Emergency Fund Is A Lifesaver And You Should Have One, Too
The key to a solid emergency fund is that it should be enough to cover three to six months of your expenses.
This way, if something happens and you’re suddenly out of work or otherwise unable to earn money for an extended period, you can still maintain your standard of living without having to dip into your savings.
Your emergency fund should be kept in a separate account from the rest of your money so that it’s safe from any withdrawal fees or other charges associated with using credit cards for purchases (more on credit cards later).
It should also be kept in a liquid form meaning it will be easy for you to access quickly if needed and safely tucked away somewhere not easily accessible by others (like under the mattress).
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9. Avoid Lifestyle Creep By Creating A Budget That Works For You
When it comes to creating a budget, millennials have the upper hand. To understand money and save for their future, millennials have been practicing this essential life skill since they were young.
Generation Z is just beginning to develop solid financial habits and practices they are still young and trying to figure out what works best for them as individuals.
The younger generation (Gen Z) may not be ready for a budget yet, but they need one now more than ever before.
I believe that to ensure success in all aspects of life, we must learn the principles of personal finance today so that we can lead by example with our children tomorrow!
10. Not All Money Apps Are Created Equal Find The One That Works Best For You
It’s important to remember that not all money apps are created equal. Some are free, while others charge a monthly fee. Some have great features, but aren’t user-friendly; others are easy to use but don’t offer much in terms of depth of control.
If you’re looking for a new way to manage your finances with an app, take some time researching what’s out there before diving in headfirst you’ll save yourself a lot of frustration down the line!
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Conclusion
Ultimately, Gen Xers and millennials have a lot to learn from each other when it comes to personal finances.
While the younger generation might be more likely to pick up money management skills sooner, they’re also reliant on their older siblings and cousins to teach them these skills.
As we discussed throughout this post, practically every lifestyle choice has financial implications so don’t wait until you’re already in a hole before you start learning how to manage your money.
Whether you’ve just started saving or investing or still need help starting with budgeting, there are plenty of tools out there that can help.
Further Reading
Millennial Money Advice for Gen Z: Buzzfeed article offering valuable money advice from millennials to Generation Z.
How Gen Z Thinks About Financial Literacy: Everfi blog discussing the financial literacy perspective of Generation Z.
Mastering Your Finances: Financial Lessons for Gen Z and Millennial Moms: Moneycontrol article providing financial lessons for Generation Z and millennial moms to manage their finances effectively.
FAQs
What are some essential financial lessons for Generation Z?
Generation Z can learn valuable financial lessons from millennials who have been through similar experiences and challenges. Advice on budgeting, saving, and investing can set them on the right path to financial success.
How does Generation Z approach financial literacy?
Generation Z tends to have a tech-savvy approach to financial literacy, using online resources and apps to gain knowledge and manage their finances efficiently.
What are some money management tips for millennial moms?
Millennial moms can benefit from budgeting strategies, building an emergency fund, and investing for the future to secure their financial well-being and that of their families.
How can Generation Z improve their financial decision-making skills?
By seeking financial education, understanding the importance of long-term planning, and seeking advice from financial experts, Generation Z can make informed and better financial decisions.
How do millennials handle student loans and debt management?
Millennials often share insights on managing student loans, including refinancing options, repayment strategies, and the impact of debt on their overall financial health.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.