This is an article ‘Increasing Your Gen Z Piggy Bank (Money Advice For The Young And The Young At Heart)’ by Marc Primo
Arguably, Generation Z engages more frequently in consumer culture regularly. Given that they have reached the age where they can start earning income and start their savings account, today could be the time for our readers from that timeline to kick off their journeys in the vast world of personal finance.
SPOILER ALERT– there’s one possible dilemma you could face when saving money.
How can you manage the number of options you have to meet your personal financial goals when the ‘wants’ are always there, which could quickly drown you in the depths of debt?
Yes, kids. That only means one thing. Discipline can never be outgrown.
But it can undoubtedly be nurtured!
In other words, things could be made simpler by clearly understanding ordinary means and surefire methods to save your dough!
Here are a few insights from someone who wished he knew all of these when he was younger, that every Gen Z’er can surely profit from!
It’s All in the Mind
First and foremost, it’s crucial to set personal goals when saving and controlling expenses. In principle, it is practical to build positive habits, such as adequately allocating financial resources for both spending and saving. In this regard, you could start by assessing how money is earned and exhausted vis-a-vis both needs and wants.
No specific or fool-proof method could guarantee you can maximize your savings since each individual’s circumstances or behavior can always vary. Jack gave more value to some magic beans in exchange for his family’s prized cow, while Prince Charming extravagantly used all his resources to find the girl whose foot would fit the glass slipper.
And yes– both were foolish concerning wasting money and resources if we’re being realistic. But for surefire ways to save money for Gen Z’ers, certain principles could still guide one’s approach to saving money properly.
Prudential Financial, Inc. acknowledges the following:
The 50/30/20 Rule
The Zero-Based Approach
The Envelope System
According to the financial giant, all serve as a practical budget approach.
One of the most popular and common approaches earning Gen Z’ers can adopt is the 60/40 Rule, which allocates 60% of income before taxes to fixed expenses. In contrast, the remaining 40% is separated into retirement savings, long-term savings, short-term savings, and “fun money” in equal increments of 10%.
It must be taken into account that there is room for adjustment to accommodate other needs and wants, and it depends on personal discretion. Similar to one’s passions, it is essential to have discipline when saving. We all know there’s simply a need to commit to long-term and short-term goals.
Aside from this, It’s also essential to have adequate documentation of your monthly expenses to make it easier for you to monitor the inflow and outflow of your money. Before you say, “Yeah, right, Boomer,” consider how being a little spontaneous can easily ruin your flow and make it difficult to return to your budget methods. We are all human, after all (which is another adulting lesson, actually).
The key is knowing that while there is still freedom and flexibility in spending money, control is still essential. There is no need to be confined to budget plans– and again, as long as you have the proper discipline for both short and long-term goals, you can keep yourself on track.
Safety and Security Make Money Grow
Having a safe place to keep your savings is a must. We’ve all been taught this in primary school. What isn’t taught is this: your financial goals must compliment your current action plans.
No matter how you look at this at any age, Choosing the best bank that will fulfill your specific needs for your goals is important, so consider the numerous essential factors carefully, such as interest rates, investment potential, low penalty fees, etc.
The potential for how you can grow your savings in your chosen financial institution must be a determining factor before you even open an account. You’ll have to ensure that the bank is stable, a good investment channel and their bank fees will not hurt your wallet. You should also consider the type of account you’d want to open, as it can contribute to the money you’ve saved in terms of interest or time deposit value.
One of the best options is high-interest savings accounts, often offered by online banks. Since these have relatively higher interest rates, more excellent rates of return could bring more dough into the bank account– and small amounts could go a long way.
Rewards checking accounts are also a great way to save as purchases are incentivized through cash-back programs; shopping becomes less painful to one’s wallet as succeeding purchases are discounted.
The truth is: consumerism has become an inevitable part of society as it is the primary means of access to everything, even basic necessities such as food, toiletries, shelter, and education. This leads us to accept how the main objective of cash backs and rewards, which is to promote and encourage consumer culture, could be taken advantage of to have easier access to tangible and intangible resources.
However, it is imperative to have a mindset that complements the financial plans discussed in the previous section so that cash rewards do not become insubstantial consolations for purchases. It is tempting to buy more because it is possible to save more in future purchases.
Yet, in the end, carelessness could result in even less money.
Technology is your Friend
Given that technology has become an integral part of every Gen Z’er’s everyday life, pop culture, and even identity, there are many ways that technological advances could prove themselves useful beyond just mere entertainment channels.
For instance, numerous businesses have invested in technology and even changed their business models appropriately such that convenience and accessibility could give more value to consumers.
The COVID-19 pandemic has also given rise to a more significant number of online banking users; Deloitte’s 2021 study yielded that a substantial number of individuals started online banking during the pandemic, and there is a positive trend in the number of first-time users as it is closely doubling in the past year.
Technology, particularly fintech automation, has given banks an excellent competitive advantage as customers have heavily relied on online banking and e-wallets consequent to the pandemic.
With all those disruptions, these innovations could also become opportunities to make saving more convenient and systematic for young earners. As it is also advisable to have separate bank accounts for expenses and savings, automated bank deposits prove themselves helpful in controlling expenses.
Automated transfers could be used to separate budget allocations at the start of the month. Then, the money in the “spending account” could be used with no threats of exhausting all savings garnered throughout the past months and years. After all, the temptations brought upon by wanton shopping could make saving money as tricky as trading your family’s prized cow for beans.
Having boundaries could help refocus your financial priorities, thus making it easier to adhere to budget approaches. And again, that can only be met through (you’ve guessed it) discipline.
Saving is not a Chore!
Who’s to say you can’t make saving and delayed gratification rewarding?
Having a clear purpose for saving could make it more encouraging and fulfilling for anyone aged five to 95!
Set long-term and short-term goals that will motivate you to save. Essentially, jumpstarting one’s savings entails controlling personal expenses. However, it is crucial not to deprive oneself of needs or… rewards! Pass off wants as much as you can for the moment. Just get back to them when you’re Elon Musk rich! Still, Generation Z could use hobbies, clothing, or even the latest iPhone as motivation to save, too!
Then, when objectives become too easy to meet, it is time to pursue bolder and more challenging goals like a new car, room renovations, and travel. Honing a goal-oriented mentality could certainly make building habits easier. It could also give rise to healthier perspectives on saving.
Remember, like most pursuits in life, the first step is often the most difficult. Yet, it is possible to start today because there is always time. There is no deadline for creating one’s financial journey but if not now, then perhaps, not never!