Gen Z Tips for Financial Freedom

Skyleigh McCallum, Kamloops Realtor and financial advisor, fills out her free budget worksheet.

Gen Z is a force to be reckoned with! Born between the late 1990s early 2010s, Generation Z is connected, worldly, and socially conscious. They’re savvy consumers who were raised with technology at their fingertips. They care about how their time, energy, and money is spent. 

They also know that, for most of them, financial success isn’t being handed to them on a silver platter. 

I was speaking to a man in his 80s recently, who’d worked as a salesman at The Hudson’s Bay his whole life. It was a rewarding and respectable career, and it provided a happy life for his family, including his wife and four children. He worked hard and saved well. The mortgage on the family home was fully paid. They had a nice retirement fund. The whole family even took annual trips to Hawaii growing up.

But for Gen Z, this kind of lifestyle just isn’t realistic. Sticking to one career is less likely. Investing in property is a nice idea, but not as easy for young people today as it was for their grandparents. The cost of living has increased a heck of a lot more than the average wage. The choice to pursue post-secondary education could also mean years of debt, and raising a family of six on a single income? Oh boy.

If you’re a Gen Z, it’s likely that none of this comes as a surprise. You’ve seen Millennials experience similar struggles already (queue the avocado toast memes). Similar to an older sibling, it’s like they were the trial run and now they can pass on some wise advice (or you can at least learn from their mistakes 😜).

Despite all of this, financial success is still possible for Gen Zs. Here are a few tips from a Millennial Financial Educator to help you make it happen! Realistic tips that don’t include ideas like saving half your paycheck (tough to do when that’s what your rent costs), buying less fancy coffees, or just buying a house like it’s NBD.

Saving 10% Of Your Income

While not all the old-school financial advice you hear applies these days, some of it still does.

For example, an important lesson taught in The Wealthy Barber, a financial planning book written by David Chilton, shows the potential impact of saving just 10% of your income. 

Even if you can’t save much—even if it’s just 5% of your income for now—the important thing is to start. Can you spare $50 every two weeks? Great. $100? Even better. 

A Gen Z drops a coin into a piggy bank in order to save money.

Put these savings into a separate account with a higher interest rate than your regular chequing account. Move this amount over right after you get paid (or set it up so it’s done automatically), rather than waiting to just save whatever’s left over after you start spending. The earlier you start, the more you’ll end up with because of the power of compounding interest.

If there’s one benefit you have over all the older generations, it’s time. Use it to your advantage. Start using your money to make you more money, and start now. Your future self will thank you!

If you’re looking for some help with budgeting, download my free budget worksheet. Sometimes simply writing things down can make a big difference!

Learn The Rule Of 72

This piece of advice relates to the previous one. The Rule of 72 was a concept coined by Einstein. It’s an easy way to calculate compounding interest and how long it will take your money to double.

How do you use the Rule of 72? Divide 72 by the rate of return you’re getting in your savings account. That’s the rough amount of years it will take to double.

For example, say your interest rate is 2%.

72 / 2 = 36

So it will take approximately 36 years for your investment to double. That might sound like a long time, but if you’re saving consistently, it really adds up! The higher the interest rate, the less time it takes to double. 

Be Cautious When Buying New Vehicles

A new vehicle may seem like a great idea, and maybe it’s something you really need—but plan appropriately. If you do decide to buy or finance a vehicle, make sure you’re committed to paying it off before buying your next one. 

A Gen Z driving a new vehicle.

I’ve seen many people roll debt into debt over and over again because of this, and now suddenly you’re paying double what your vehicle is worth.

So before you drive that shiny new car off the lot, make sure you fully understand the financial commitment and have a plan in place to pay it off. 

Create An Emergency Fund

We’ve seen the importance of this lately more than ever. There are some things you just can’t predict or plan for. Your vehicle suddenly breaking down. An unexpected medical expense. A worldwide pandemic that severely affects employment rates. The overall state of the economy and job market.

For this reason, it’s so important to have an emergency fund. Make it a priority. The rule of thumb is to have six months’ worth of income saved in case you lose your job or an emergency pops up, but make this a goal and start with whatever you can. 

Why is an emergency fund so important for Gen Zs? An emergency fund can help prevent you from going into debt and paying interest on credit card balances or loans when unexpected costs arise.

Using your credit card as your emergency fund is not something I recommend, not only because of the interest you’ll end up paying, but because using it irresponsibly can harm your credit score. That being said, you can also use a credit card to help improve your credit score—but only if you use it wisely. 

Embrace Gen Z Side Hustle Culture

For a long time, most people have relied on a single main source of income: their full-time job.

Now enter the side hustle generation. 

One survey showed that Millennials make an average of $10,972 per year from side hustles—that’s 20% more than Gen X and 46% more than baby boomers.

Generation Z embraces the side hustle, working on laptops in a coffee shop.

So it makes sense that we would expect this trend to continue, especially with the shifting work and economic landscape. More people are working from home, online education and self-education is more accessible than ever, freelance hubs are skipping the middleman, the increased popularity of online shopping is growing audiences for small businesses. Combine all of that with Gen Z’s entrepreneurial spirit and desire for work-life balance and you have the perfect recipe for a successful side hustle.

From freelancing to selling handmade goods, finding a side hustle that brings you both fulfillment and cash is a great way to take that extra step toward financial freedom.

Spend Your Money On Things That Offer You Value

This is something that Gen Z is already quite attuned with. You have strong values and a desire to align your actions with those values. 

Make sure the way you spend your money is aligned, too.

Is exercise a crucial component of your mental wellness? Buy the gym pass. Does working at the coffee shop with your favourite latte boost your productivity? Go for it. Does your morning smoothie give you the energy you need to tackle the day? Splurge on the protein powder. Does supporting local business matter to you? Amazing—just shop a bit less to offset any extra costs.

A Gen Z holding out a pink gift bag after shopping mindfully.

On the other hand, if there’s something you’re thinking of spending money on, but you don’t really need it, sleep on it. You know that feeling when you check your credit card balance or bank account at the end of the month and wonder where all the money went? That’s all those harmless, little purchases you made throughout the month that you didn’t really need. It adds up! 

It’s all about finding a balance. If this is something you struggle with, I recommend creating a budget and tracking where your money is going so that you can better identify where you need to be more mindful with your spending. It’s just one of many ways to save a bit more cash

If you’re interested in learning more about how you can set yourself up for financial freedom, I would be happy to help! As a Financial Educator and Realtor in Kamloops, helping young people build bright futures is my thing. Let’s chat and see how we can make it happen for you!

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