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Jan 13, 2023

Gen Z is the current generation of youth born between 1997 and 2012. In 2023, the oldest of this generation will be 26, just finishing college, getting married, and starting families. This tender age is the best time to start investing and saving for retirement, although only 39% of adults in their 20s do so. So, if you are a Generation Z, take the suggestions seriously and be different from the majority. consult a financial advisor Proper financial planning requires a lot of expertise. The financial world is dynamic, with new trends emerging from time to time. Though you may have learned the basics of financial projections in school, it helps to consult a professional to assess your individual situation and prepare a viable plan keeping in mind the prevailing economics. The advisor will help you outline appropriate financial goals and the specific risks that threaten them. They will also help you design a suitable strategy to mitigate these risks. In addition, they will advise on tax-efficient savings solutions and suggest relevant investment products. When looking for a financial advisor, it will help to ascertain their professional qualifications and experience level. One who has served many clients for many years and achieved positive results is in the best position to offer meaningful advice. stick to a budget Budgeting is fundamental if you want financial success. Recent surveys suggest that 80% of Americans will have a budget by 2020, an increase from 68% in 2019. Follow suit and set the pace for your financial success. Ideally, you sum up your income from various streams and allocate a specific amount for expenses such as rent, food, entertainment, transportation, taxes, insurance and health care. Expenditure should not, in any way, exceed revenue. If this happens, you may want to cut back on spending on non-essentials like entertainment and partying. Alternatively, find an income-generating side hustle to supplement. your salary. Likewise, it will help avoid lifestyle downgrades, where you adjust your lifestyle upward as your income increases. This habit has the adverse effect of living paycheck to paycheck, which is detrimental to your financial future. Aim to maintain an affordable lifestyle regardless of how much you earn. Set aside some amount for emergencies Life is full of uncertainties, and certain events may require more cash than you probably planned for. Some undisclosed emergencies include falling ill, car accidents, workplace injuries, sudden inflation, job loss, major home repairs after natural calamities like floods, funerals, and unexpected travel. To protect yourself from such incidents, it would be better to start an emergency fund. As a general rule of thumb, there should be three to six months’ worth of living expenses. But you can still be more aggressive and accumulate enough money to cover even one year’s expenses. Keep the money in a savings account for quick access whenever needed, given that emergencies strike unannounced. Most importantly, exercise discipline so that you do not use cash for non-emergency expenses such as traveling abroad. Diversify Your Investments Don’t put all your eggs in one basket. When one investment fails, you will have other sources of income to depend on. In addition to your nine to five job, you may want to consider these passive income streams: Dividends Stock Exchange-Traded Funds Rental Properties Affiliate Marketing Creating a Mobile or Web App Selling Online Courses Advertising on Your Car Flipping Real Estate Properties Diversifying your portfolio helps you avoid economic downturns in select industries, which are inevitable from time to time. Take advantage of financial apps Gen Z is synonymous with tech savvy. Currently, there’s an app for virtually everything, including financial planning. Installing a budgeting app helps you keep track of your expenses so you don’t break your rules as often. Daily reminders of your spending habits help you stay alert and focused on your financial goals. With Artificial Intelligence (AI) capabilities, such apps can also analyze your spending versus income and suggest how much you should save. save for retirement If you’re about 26 now, and the average retirement age in the US is 63, you have about 37 years to save for the later days of your life. Let’s say you earn $100,000 a year and follow the 15% retirement savings recommendation. In that case, by the time you retire, you’ll have accumulated $555,000 USD, plus interest, which is much more than the $65,000 average retirement savings for American households. The good thing about starting early is that you only save a little monthly without undue pressure. If you start saving for retirement in your 40s or 50s, you may need to contribute a higher percentage of your salary to meet your goals. conclusion As Generation Z, never imagine you’ll have a lot of time before you get serious with financial planning and investing. The sooner you get your finances in order, the greater your chances of achieving optimal financial health. If you are not sure how to structure things, it would be best to consult a financial advisor to assess your financial situation and help you formulate and pursue reasonable budgetary objectives.