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Budgeting, Credit, Savings

Ways for Gen Z to Learn Smart Money Management

By Amanda Winstead | Monday January 24th, 2022

smart money management

If you’re part of Gen-Z (born 1997-2012), you’re probably starting to encounter larger responsibilities like paying bills, building savings, and graduating from college. While money and the responsibilities that come with it might seem daunting, it’s actually a time to start smart money management, by building your financial acumen that will serve you well down the road.

Here are a few ways you can learn to manage your money effectively as you enter adulthood.

Financial Literacy

Just 24% of Americans aged 22 or younger are financially independent. That’s a drop of 8 percentage points since 1980. Granted, much of that instability is due to the pandemic, but young people today also face slower economic growth, lower adjusted earnings, and limited financial freedom. To overcome these challenges, Gen-Z will have to become financially literate.

Financial literacy is a skill few of us learn in school or college. However, knowing things like the difference between the savings accounts your bank offers and understanding how to best invest your money are keys to gaining financial freedom.

To become financially literate, you need to start investing your energy and time into learning about the options that are available to you. You may be lucky enough to find a college course on financial literacy but can also scour the web to find reputable resources that will advise you on things like saving during your first year of college.

Budget

Most folks classed in Gen-Z aren’t making large salaries — yet. Of course, as Gen-Zers gain experience and move up the ladder, they’ll gain access to higher-paying jobs and increase their income.
But, for now at least, if you’re part of Gen-Z, you need to learn how to budget as part of a responsible financial plan.

At a minimum, a clear budget should show you your income and expenditures. This will tell you exactly how much you need each month to cover your bills, but it will also show you how and where you can make extra savings.

Your budget should also help you set financial goals. As someone who probably has a lower income currently, your first goal should be to create an emergency fund that will cover you for 3 months-worth of expenses. This will give you the freedom to start investing your income, as you’ll be able to make investments without worrying about how you’re going to make ends meet.

Secure Financial Data

The way we buy things is changing constantly. Just a few years ago, you couldn’t use your phone as a debit card, and the idea of Venmo-ing your friend was unthinkable. While the increased access to your money is great for consumers and businesses, you still need to ensure that your financial data is secure — losing your income to scams or fraud can set you back years.

Whenever you’re making a mobile payment, you should ensure that you’re using the business’s official app or website to do so. You also need to double-check that the Wi-Fi service you are using is secure as cybercriminals can spoof registration systems and steal your data on unsecured networks.

Even with all of these concerns in mind, mobile payments are secure and safe. That’s because mobile transactions are backed by highly advanced methods of encryption and tokenization which secure your identity during a transaction.

Learn to Invest

Once you’ve built an emergency fund and can make savings every month, you should start to consider how you can make your money work for you.

It’s tempting to go all-in on higher-risk investments like cryptocurrency, but you should probably start by consulting with a financial advisor who can help you make safer investments that will yield more modest returns.

Conclusion

Smart money management is all about learning the ropes and building enough savings to become financially independent. To do this, you can start to budget and build your emergency fund. Once you have an emergency fund in place, you can begin exploring other options like investing.

About the Author: Amanda Winstead is a writer from the Portland area with a background in communications and a passion for telling stories. Along with writing she enjoys traveling, reading, working out, and going to concerts. If you want to follow her writing journey, or even just say hi you can find her on Twitter.