Gen Z’s Wallet Woes: Practical Advice for Easing Financial Stress
Gen Z is entering the workforce during a time of mixed signals. On one hand, they face the strongest job market in recent history, with lower unemployment rates and rising wages compared to previous generations, especially Millennials who graduated during the Great Recession.
However, Gen Z also contends with several financial challenges, that hit the pause button with creating long-term goals:
High inflation: Rising prices for essentials like food and housing have eroded purchasing power, making it difficult to afford basic necessities.
Housing affordability crisis: High housing costs and limited availability make homeownership a distant dream for many Gen Zers, hindering wealth accumulation compared to previous generations.
Social media pressure: The constant exposure to curated online lives on platforms like TikTok can exacerbate financial anxiety and contribute to a feeling of falling behind.
Mental health impact: Financial struggles are taking a toll on Gen Z's mental well-being, with higher rates of anxiety and depression reported compared to other age groups.
A Personal Journey through Money Challenges
I’m experiencing these challenges with my children, particularly my daughter who recently graduated from college. Unfortunately, but also somewhat fortunately, she had to move back home because her rent, which was already higher than my mortgage, increased by another $250.00. On top of that, she’s struggling with numerous job applications on Indeed, which often seem to disappear into a void with no response from employers.
Yet while the complex situation may cause Gen Z to feel stuck and unable to take control of their finances, here are some, Feasible Financial Tips:
Pay Yourself First: Automate a portion of your income into savings to build a financial cushion. This will help you get into the habit of saving and ensure that you are always putting money away for the future. Even $5-10 is a start, no amount is too small to start with.
Prioritize debt repayment: Develop a plan to tackle high-interest debt like student loans. Getting out of debt will free up more money each month that you can use to save for other goals.
Leverage compound interest: Start saving early and take advantage of the power of compounding to grow your wealth over time. Compound interest is often called the "eighth wonder of the world". Why? Because it can help your money grow exponentially over time.
Make saving fun: Explore creative ways to make saving enjoyable, like setting challenges based on your passions. For example, every month I challenge myself to close my Apple Watch rings daily. At the end of the month, I transfer $5 for every day closed. In June, I closed my rings 26 times. I saved $130, which I allocated toward vacation spending. I think of this as a challenge of money and movement. If you find saving to be a chore, you are less likely to stick with it. Find ways to make saving fun so that you are more likely to reach your financial goals.
Don't overlook the power of side hustles: Consider a side hustle to supplement your income and reach your financial goals faster. A side hustle can be a great way to earn extra money that you can use to save or pay down debt.
Gen Z’s Advantages
While Gen Z faces unique challenges, they also have advantages. By practicing good financial habits and leveraging the strong job market, they can build a brighter future. Millennials, despite their own struggles, offer a case study in overcoming adversity. With time, patience, and a strategic approach, Gen Z can achieve financial security and realize their own version of the American Dream.
Take Control of Your Financial Stress Today!
The first step to taking control of your finances starts with your active decision to make a change. Seeking guidance from a financial coach can help you create a financial plan and make smart financial decisions. Book a free consultation with Financial Fitness, LLC. to further turn your financial anxieties into actionable steps towards a brighter future.
Visit financialfitnessct.com for more information on services that can help you gain the knowledge and tools to transform your financial outlook and achieve the future you deserve. Because at Financial Fitness, LLC “we cultivate a mindset” that helps individuals feel in power and in control of their finances, not the other way around.
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