On the outside, managing your finances seems like a daunting task you’d rather avoid than face head-on. However, in today’s world and economy, building wealth early on and being proactive about your financial future ensures that your life won’t be riddled with far more financial stress than you can handle.
The thing is that a lot of Gen Zers were never taught how to budget properly. Maybe your parents and relatives gave you a few words of wisdom while growing up, or maybe your school touched on the subject a bit. But there’s nothing concrete that you can grasp onto.
Worry not! Below, we’ve compiled some budgeting tips so you can better manage your money:
Save As Soon As Possible
When it comes to budgeting, there’s no such thing as “oh, you’re too young to do that!”
Gen Zers like you should begin saving as soon as possible for your future, especially for retirement. The earlier you start your savings journey, the more time your money has to grow. In your case, time is money—and since you have lots of time on your side, take advantage of it!
Start small if you’re at the very beginning of your career. The trick is to save 10% to 15% of your annual income. No pressure, though! Anything is better than nothing, so you can go lower than 10%.
When you start young, you don’t need to invest nearly as much each month since your money has plenty of time to compound or snowball on itself.
Along with this, open a savings account if you haven’t yet! Depositing your money in a bank prevents you from spending too much of it and keeps your savings safe. You can also keep an emergency fund within your savings account to have something to turn to on a rainy day.
Know What Your Goals Are
Even though it might seem way too early for you to even think about retiring, knowing what you need in the long term can help you make informed decisions in the present.
You can start by figuring out how much money you’ll need to live comfortably. Is there a particular lifestyle you want to pursue? Write it all down! This kind of long-term vision can help you determine how much you should save throughout your career to retire comfortably.
You can also work backward. For example, plan the age at which you want to retire and calculate your anticipated monthly expenses and the guaranteed income you can get through retirement accounts. This will help you arrive at a more precise estimate that you can strive to reach with your savings and budgeting.
Of course, there are other goals outside of retirement. Maybe it’s starting your own business or buying a home. It can even be paying off debt or traveling the world. Whatever they are, the important thing is that you set them and take time to think about the future that you want for yourself.
Steer Clear Of Lifestyle Creep
The sooner you begin your budgeting journey, the better spending habits you can develop over time. It’s a good thing budgeting is easier than ever, thanks to financial apps. However, what’s difficult is sticking to whatever you’ve created for yourself.
So, as much as possible, exercise financial restraint. Do not give in to “lifestyle creep” the moment you get promotions and earn more money. Instead, put all that excess into investments and savings—at least for the first few years.
Even if you make a lot of money, lifestyle creep—the tendency to spend more as you make more—can make you live paycheck to paycheck.
Let The Apps Do All The Work For You
Those financial apps you see on social media or that are endorsed by your favorite influencer? Now’s the time to take a good look at them. were raised on social media and the internet. Plus, did you know that Gen Zers use finance apps more than any other generation? So get on that trend and research an app that works for you!
Downloading finance-focused apps makes it much easier to track your spending and start your investing journey. There are apps for everything, including ones that will help you manage your finances, plan your savings, and make investments.
Check to see if your bank has its own app so you can connect to your account right away. You can also use money management apps such as Wally, Acorns, or Mint.
Educate Yourself on Recent Events and Financial Matters
When it comes to money and finances, knowledge is power. And one way to stay knowledgeable is to keep up with global trends. Whatever happens around the world can significantly impact your financial decisions, especially if you’re considering stocks.
The global economy has a major effect on money and the cost of living, which can subsequently affect your budget and spending habits. For instance, if you know that a recession is imminent, you will need to change your spending habits accordingly.
Even if you can’t forecast everything, especially unexpected events that happen in the future, having a general understanding of the state of the world will help you make more educated choices.
Furthermore, you need to stay curious about financial matters. You can learn how to handle your money from so many personal finance books, online courses, blogs, etc., so pay attention. And if you have questions you can’t find a decent answer to, you can always contact a financial advisor.
Make Wiser Decisions For Yourself and Your Future
Although managing your money well is undoubtedly difficult, you can learn how to do it at a young age.
Aside from what we’ve listed above, ask some of your older family members and friends about their spending and budgeting practices in addition to conducting your own research online, and see if you can practice any of those yourself.
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