Financial Planning Tips for New Taxpayers: Generation Z

While Gen Z may have a different perspective on money matters than previous generations, there are still some timeless lessons that have universal application.

Generation Z (born between 1997 and 2015) is the first generation to grow up in a digital world, which gave them a different view of the world. Naturally, their outlook on life, career, finances, etc. is different from previous generations. Generation Z is in an enviable position to take advantage of the opportunities made accessible by the technological changes of this era.

Considering that financial services have benefited from rapid advances in technology more than many other businesses, the opportunity to democratize access to a variety of tailored financial solutions is huge. Many financial products and services have been aimed at affluent pre-retirees for a very long time, which has led to a decline in awareness and adoption by the masses. Financial advice was a reserve of the ultra-rich while others relied on relatives or friends for advice. This has undergone a major change. Today, advice is available everywhere, in fact it’s a deluge. In today’s world where anyone can post financial advice on social media, the challenge is to get facts and information from a reputable source. So while Gen Z may have a different perspective on money matters than previous generations, there are still some timeless lessons that have universal application.

Your financial goals will likely change over time, but the practice of setting them and investing time in thinking about the future is a good exercise that can help you craft your unique financial roadmap.

Personal finance tips for Gen-Z!

It is important to be disciplined

Being disciplined in the personal finance space is an absolute essential in light of the fact that, in life, there is a lot of potential for making poor financial choices. With discipline, one can have total control of one’s financial life. In fact, it opens the door to new opportunities that allow you to excel financially. No matter what you want to accomplish, financially or in general, discipline is needed to achieve your goals and get you where you want to be.

Getting the basics right will help you build a strong financial foundation allowing you complete financial freedom in the future. The fundamental premise of Earn-Save-Spend versus Earn-Spend-Save is the basis of financial discipline. By saving and investing early, your future self will reap the benefits of those early efforts.

Budgeting is key

Budgeting is quite possibly one of the most discussed and justifiable habits too. Having a budget decreases the chances of living on the edge and increases the chances of saving money. Budgeting takes some effort, but over time, budgeting becomes second nature and a way of life. A good habit to get into!

Save for emergencies

Emergency funds are such an important part of personal financing that it is worth discussing it again. Basically, an emergency fund is a savings pool that should only be used in an emergency/crisis such as job loss or an unexpected medical bill. It’s a separate kitty, separate from the usual savings.

After establishing an emergency fund, you can then pursue your quest in different areas of personal finance, including protection (insurance), wealth building, and goal investing, where you can begin to put your money for you.

Be proactive, not reactive

Planning things that haven’t happened yet can seem illogical, however, it’s just when it’s too late to come back and the feeling of disappointment that you didn’t move on sooner, that its importance is realized.

It’s hard to anticipate things like starting a family or saving for retirement when you’re young. It’s easy to wait until the time is right to start preparing. But by being proactive and planning ahead, you can be prepared, both mentally and financially.

The essential

The seasoned half of Gen Z are starting to enter the corporate world, and mastering the language of money is essential so you can make the best financial decisions for yourself.

There is plenty of data on YouTube that can be helpful, but not all advice is created equal. Getting information from a trusted source can help ensure that it is to your greatest advantage, and by remembering these lessons, you can set yourself years ahead of your fellow Gen-Zers!

(By Ashish Misra, Chief Operating Officer – Retail Banking at Fincare SFB)