Generation Z grew up during the rise in technological advancement and the emergence of digital platforms. Coming to the brink of adulthood with a nation that once had a promising economy, currently halted by a global pandemic, this generation has the potential to face more financial uncertainty than the previous generations.
That deep familiarity with economic uncertainty will likely bolster some spending habits that Generation Z inherited from millennials who dealt with “The Great Recession” while making new financial actions that companies must grasp in the years to come.
Consulting firm Barkley Inc., in a survey, reckons that the young shoppers represent yearly direct spending of more than $140 billion in the U.S. and produce up to $127.5 billion in extra consumption, all before they’ve reached their crucial working years.
To ensure self-confidence in the understanding of concepts including saving, investing and debt, here are four life-changing principles to build financial literacy:
1) Save Your First Paycheck For Retirement
The feeling of getting your first paycheck is a milestone for any young person venturing into the workforce for the first time. Deciding on what to spend or keep is an exciting feeling.
However, being advised to save and not spend your hard-earned money is lowkey and not ideal for many young people. However, there are advantages to starting early: you’re already familiar with not receiving a lot of money, so you won’t feel the ache of reducing your income and your early savings multiple, making you eligible for the IRS Saver’s Credit.
The IRS Saver’s Credit, which is essentially a tax credit, is given to qualifying individuals who are at least 18 years old, are not full-time students and earn less than $33,000 a year. If you count up all the advantages, you can get a big return on your initial savings.
2) Make use of Digital Money Management Apps
Financial literacy, which refers to both your understanding of and capability to use financial skills, is one of the most crucial factors in wise money management. Though this is a topic where many people are missing in education, there are more chances than ever to learn about finance. Financial literacy apps are the ideal way for Gen Zs to become more familiar with money management.
The World of Money, a free app voted best for financial management, is a new approach to learning money management through technology. Although many economic literacy apps place emphasis on one age group, World of Money has information and content for everyone.
The app has teachable lessons and video segments with a quiz to teach about saving and spending. With each lesson lectured by World of Money alumni, who are the same age as the focus audience, giving consumers the chance to learn from their peers. So rather than sit through what can be a boring lecture, just download the app, which is accessible for all Apple and Android users.
3) Avoid Credit Card Debt
Today for many young people, it’s easier to access credit, not only through old-fashioned credit card suppliers, but also point-of-sale lenders that allow you to buy now and pay later.
The heightened use of digital payment possibilities, such as Venmo and Apple Pay, can make passing money faster because transactions happen in a split second with the tap of a button.
Establishing excellent financial practices from the start is key, and it starts with maintaining how much you’re making and spending. To avoid credit debt and the endless customer service calls to correct your credit, instead of having five credit cards, have a minimum of two.
4) Financial Conversations With Your Parents
This might appear straightforward, but it’s truly profound. In most circumstances, no one has your best concerns in mind more than your parents. Often, we don’t pursue guidance from our parents because we believe we already know all about them, but they may have a lot of financial knowledge to share.
For many young people, discussions regarding financial literacy are not brought up in conversations. A good start to healthy financial habits would be joining your parents next time they work with their financial planner or accountant. Observing how money is balanced, saved and allocated in these sessions is vital to beneficial spending and investment.
The more you can pick up early, the fewer errors you’re likely to make, and the more you can boost your money.