If you are a Gen-Z (meaning born between 1997 and 2012), you are likely still in the early stages of your career. But that doesn’t mean you should ignore financial planning. As Gen Z enters adulthood with a lot of ambitions and career goals in mind, the need for personal finance tips and knowledge has become significantly more important. Fortunately, there exists a wealth of information and wisdom from the generation that came before – millennials.
As millennials have witnessed economic recessions and technological revolutions and embraced new financial paradigms, they have gained valuable insights and learned new financial lessons. So, now it’s their turn to serve as financial advisors to Gen Z.
In this article, we will list down a few personal AI finance tips and strategies by millennials that will surely help Gen Z forge a path toward financial independence and success.
Financial steps Gen-Z should be taking now
Furthermore, in this blog, we will discuss a few essential money management tips that Gen Z must follow to have a secure and debt-free future.
Keep a close tab on your spending
If you have a habit of spending more than you earn or save, you need to put an end to it. For a secure financial future, it’s crucial to start spending less in the present. Be it a small purchase or a large purchase, make sure to keep a close tab on your spending.
This will give you a clear understanding of where you are spending the money and if there is a way to reduce the expenses.
In an interview with Zee Business, Rohit Garg, CEO and co-founder of SmartCoin, said, ‘’When it comes to savings, the golden rule states that you must save a good deal before spending. This means you should only spend when you have set aside a significant portion of your income in a savings bank. If you do the opposite, it’s time to make a change.’’
For instance, if you have the habit of frequently visiting restaurants, you can reduce your frequency.
Or if you use a personal vehicle for traveling everywhere, you can opt for public transportation to reduce expenses. Download an expense tracker app, if possible, to get a clear idea of where your expenses are superseding your income.
Be careful when using money-lending platforms
Over the last few years, money-lending AI platforms have gained huge popularity. These platforms make it conveniently easier for Gen-Z to fall into debt without realizing it, as they can use them as the default payment when buying stuff online. Unlike normal purchases, buy now, pay later apps enable the younger generation to impulse buy even when they do not have upfront funds.
All this can lead to unsustainable debt and risks impacting the credit score as well. If young people are not careful, they could get trapped in a cycle of buying items that they can’t afford. So, if you are using such money lending apps, make sure you have a plan to pay off the debt. It’s also worth setting spending limits so you only buy what you can afford to pay back.
Start saving for retirement
While it may seem way too early to think about retirement, Gen Z-ers who start to consider what they need in the long term can make much smarter decisions in the present. This might include figuring out how much money you will need to live comfortably as well as what kind of lifestyle you need ahead.
Having a long-term vision will help you decide how much you need to save during the course of your working life to be able to retire comfortably. In fact, according to a study by The Center for Generational Kinetics, 35% of Gen Z members planned to start saving for retirement in their 20s. This will give you a clear understanding of where you are spending the money and if there is a way to reduce the expenses, enhancing your financial analytics skills.
Always remain debt-free
While credit cards may seem a savior when you need money, in reality, they are eating up your savings. In case you have any unpaid credit card bills, you must pay them beforehand.
Also, if you have any loans or personal debts, get rid of them immediately. Because if you want to save a decent amount through effective financial planning, you cannot afford to have any debts.
‘’While taking out loans for college, a car, or other expenses may be tempting, debt can be a slippery slope that can quickly spiral out of control if you’re not careful. That’s why living within your means and avoiding taking on more debt than you can handle is important,’’ said Bailey Schramm, finance tips advisor at BizReport.
Invest in a tax-saving scheme
Young investors do not pay heed to investing in a tax-saving scheme. But they do realize it later. With an increase in your salary, your tax deduction also increases. If you do not invest in the right tax-saving scheme, you will have to face the repercussions in the future. So, it’s better to invest in a tax saving scheme and earn some capital appreciation out of it.
Build an emergency fund
You may be in good health now, as must everyone around you, but emergencies can arise anytime. You never know when the time will come when you need cash immediately. You might have to break your investments if you do not have emergency funds. So, it’s crucial that you save for emergencies. You can use a liquid fund so that your investments remain unaffected in case of an emergency.
Conclusion
From mastering the art of budgeting to staying clear of debts, these personal finance tips, coupled with leveraging the power of artificial intelligence through various AI apps, will help the younger generation stay on top of their finances, gaining financial empowerment and success. Additionally, there are a lot of budgeting and finance ideas that can help you better understand your expenses and spending.
