Over the past year, nearly three out of four 73% Gen Zers say they’ve changed their spending habits due to increased prices.
Rising cost of living, mounting student debt and other expenses are making it hard for young adults to start their lives.
Some common issues they are facing? Saving is one that is a struggle for many, and it’s hard for Gen Zers to save in particular because there simply isn’t much to save after bills are paid.
“Some common challenges I see younger people face boil down to saving. When you first start working full-time, you often don’t have a lot of cash to put towards savings. However, it is incredibly important to do so to save your future down the road. You don’t need to save hundreds of dollars each paycheck, which is unreasonable for many people, but you do need to focus on putting something away each month. You also want to ensure that your savings aren’t static and that the amount will increase over time. A savings account is great with the interest, but a high-yield savings account is really the best way to save for a goal,” shares Finance Coach Jeannie Dougherty.
One way to combat a lack of money for a nest egg is to set a budget.
“Another area I see many people struggling with is sticking to and creating a budget. Knowing what your expenses are monthly is critical. That awareness can help you prepare if you know you may need to spend more in certain months, like around the holidays, or to cover moving costs,” Dougherty explains. “With the cost of living growing and things becoming more challenging to afford, it can be difficult to stay afloat. Sticking to your budget, being aware of your expenses, and making sure you are putting something into your savings each month can help Gen Zers navigate a difficult economic time as they step into adulthood and begin their careers.”
Some practical strategies that have proven effective in helping Gen Zers manage their expenses more efficiently include not just saving and sticking to a budget, but working to expand income.
“Key strategies I recommend Gen Zers follow to help manage their expenses is to always look for ways to either stretch their wallets or grow their income. There are many ways people can supplement their income, even ways that can be done with their laptop at home. With this, it’s always a worthwhile investment to expand your experience and education. While you may not see an immediate return, you will build a solid foundation to be financially successful by gaining marketable skills,” shares Dougherty.
One thing that Gen Z and millennials are both navigating is how to manage their money in relationships. Money is widely known as one of the leading causes of divorce in America. It’s estimated that financial problems contribute to 20-40% of all divorces. That means that for every 10 marriages that end in divorce, four of them are because of money.
“Conversations about money can be stressful. It’s essential to find common ground and similar values with your partner and clearly identify and communicate differences beforehand. Then, devise a plan to address these differences and draw up boundaries. For some couples, they like to communicate expenses exceeding 1,000 dollars. For others, they find it best to have separate and joint accounts. These boundaries and the general understanding of the other’s financial attitudes are crucial to success when it comes to relationships and money,” states Dougherty.
The financial challenges faced by Gen Zers are significant, yet not insurmountable. With the right strategies and a proactive approach, they can navigate the complexities of the current economic climate. Embracing habits such as disciplined budgeting, consistent saving—even in small amounts—and seeking ways to augment income can lay the groundwork for a stable financial future. Additionally, cultivating financial literacy and open communication about money matters in relationships is vital. These steps are not just about surviving the present challenges but also about building a resilient foundation for future prosperity. As Dougherty emphasizes, the key lies in balancing the immediate financial realities with long-term financial goals. By doing so, Gen Zers can turn these formidable challenges into stepping stones towards financial independence and success.
