Gen Z and Personal Finances

Move over millennials — there’s a new generation of financial wellness-seeking adults in town. Generation Z, anyone born in 1997 or later, is comprised of a good chunk of people who are navigating their spending habits while attending college or entering the workforce. With the oldest group of this generation being 23 years old, it’s time for many Gen Zers to start building a foundation for their personal finances. But how? For this generation who has kicked writing checks to the curb and favors money wiring applications like Venmo and Cashapp, the ability to instantly spend and earn does not make a life-long savings plan sound all that glamorous. By acknowledging a few of the common misconceptions surrounding Gen Z spending habits, we’ve compiled a list of tips to help our future leaders become financially responsible: 

Build Credit

When used responsibly, credit cards can do a lot more good than harm. The idea of carrying multiple credit cards and accidentally racking up debilitating debt is something to be aware of for anyone considering a credit card. But according to a survey on Generation Z’s spending conducted by NerdWallet, 66% of survey takers believed that in order to build credit, a balance must be kept on one’s credit card at all times. This common misconception can hurt one’s credit score in the long run, and hinder their ability to take out a vehicle or home loan. For young adults who are diligent in paying off balances on time, a credit card is nothing to fear! College-aged and twenty-something Gen Zers who have little history with building credit should consider a secured credit card as a viable option for managing finances. Secured credit cards are normally tied to a savings account, which helps determine the monthly limit on spending. To start building your credit today, check out our Visa platinum and secured credit cards.

Save for Retirement 

Ah, the ‘ole retirement fund. Something for Generation Z to worry about once they finally lock down that dream job with benefits, right? Not exactly. As more of the generation enters the workforce, many will find that they are faced with challenging economic and social conditions that were not presented to their predecessors. New graduates are struggling with crippling student debt and a less than promising job market due to the COVID-19 epidemic, making long-term savings hard to achieve. Regardless of whether or not those in Gen Z have a 401k plan set in place with their jobs, saving for retirement should be a financial goal that is managed personally. With a traditional or Roth IRA account, saving for retirement can be conducted at one’s own speed, and won’t change if the account holder decides to switch jobs. With a traditional IRA, it is possible to withdraw from the account before the age of 59 ½ in order to contribute towards the purchase of a first home and even pay off the costs of higher education. For a generation of people who are paying huge prices to complete their education and are entering an unstable job market, taking retirement into their own hands is essential for a future of financial stability.

Start an Emergency Fund

Pay cuts, job losses, and unexpected bills are an unfortunate reality that everyone will face at least once in their lives, and an emergency fund is the key to ensuring that one is financially prepared. Not to be confused with a traditional checking or savings account, an emergency fund is a chunk of change to be used only for unprecedented costs that can pop up whenever. For the Gen Zer who is navigating how to balance a monthly paycheck between saving and spending, it is not unusual to occasionally transfer a balance between accounts. But with an emergency fund, the purpose is to keep that money untouched until an actual financial emergency arises and to contribute to the account whenever possible. To learn more about deposit account rates and how to earn more by saving more, check out Member’s 1st’s KOFE Club Savings Challenge

Develop a System for Your Finances

As the generation that grew up with the iPhone as a staple technological gadget, devising a plan for financial success is only a click away. Our members can utilize Member’s 1st of NJ’s online banking tool to check balances, pay off credit card bills, transfer funds, and more. For on-the-go access, the Members 1st Mobile Banking app can be downloaded and used to stay on top of finances from anywhere and at any time. Plus, within the Members 1st online banking portal and mobile app, members can make budgeting a piece of cake by using the “My Financial Fitness Tool.” It allows users to allocate their budgets as they please (eating out, clothes, medical, savings, etc.) and even connect outside finances for easy viewing all in one location.

For Generation Z, it’s never too early to start putting valuable financial habits into place. While your twenties are certainly a time to learn lessons through trial and error, financial wellness does not have to suffer along the way. To learn more tools that can assist in creating a plan for your personal finances, visit Members 1st of NJ Federal Credit Union ‘s list of financial services today.