Gen Z and Their Finances: Debunking Myths and Building a Solid Future

July 29, 2024

At this time, Gen Z, the generation born between the mid-1990s and early 2010s, is entering the workforce and taking charge of their finances. This generation faces unique challenges and opportunities when it comes to money management.

Financially Aware, Yet Insecure

Studies show Gen Z is not only financially aware, but that 61% are banking at the same institution as their parents, suggesting they haven't necessarily abandoned traditional banking. The burden of student loans and a high inflation rate leave many feeling insecure, with three in 10 Gen Zers saying they don't feel financially secure, and roughly six in 10 living paycheck to paycheck.

The Power of Early Saving

While Gen Z faces financial challenges, they crave financial independence and a higher standard of living than their parents. A whopping 75% aim to achieve this, showcasing their ambition. The good news? Time is their ally. By starting to save early, Gen Z can leverage the power of compound interest, building wealth for the future. Here's how:

• Understanding savings options: Traditional savings accounts allow deposits and withdrawals. Minimum balance requirements might also apply depending on the account and bank. Ridgewood’s Smart Move Online Savings account is a great way to prepare for the future. It offers attractive rates, 24/7 access, no minimum balance requirements, and there are no monthly fees.
• Realizing that savings is a financial buffer: Savings accounts are perfect for short-term goals (like a vacation) or unexpected emergencies. They typically offer higher interest rates than checking accounts, making your money grow.
• Using the power of interest to unlock growth: The longer you save and the higher the interest rate, the more you earn through compound interest.

Financial Literacy is Key

But, in order for Gen Z to achieve their goals, financial literacy will be crucial. Understanding concepts like budgeting, saving, and responsible credit card use will empower them to make informed financial decisions. Ridgewood Savings Bank's Financial Academy offers free online financial information in a quick and easy format so that Gen Zers can learn at their own pace and enhance their financial knowledge.

Build a Strong Financial Foundation: Gen Z's Guide

Budget & Automate Savings:

• Create a realistic budget: Use budgeting apps or tools to track income and expenses.
• Prioritize saving: Start small but automate monthly deposits into a high-yield savings account like those offered by Ridgewood Savings Bank. Another way to integrate savings, is with the bank’s Multiply the Change program, which automatically rounds up debit card purchases to the nearest dollar and transfers the difference to a savings account at the end of each business day.

Build Your Emergency Fund:

Track income and expenses: Set a realistic goal to save 3-6 months of living expenses. Start smaller, if need be, but build consistently. Money Management offers tools to help Gen Zers reach their financial goals by allowing them to track spending and create a budget.

Leverage Credit Cards Wisely:

Build credit: Consider Ridgewood Savings Bank's credit card options, but always strive to pay your balance in full to avoid interest.

Invest for the Future:

Start early: Time is your superpower! Consider low-cost index funds or mutual funds for your long-term goals. Speak with a Ridgewood Savings Bank Financial Consultant for more information and to get you started.

At Ridgewood Savings Bank, we understand Gen Z's unique financial needs. We offer a variety of products, services, and educational resources to help you achieve your goals. From credit score tracking with Credit Score powered by Savvy Money to personalized financial consultations, we're here to empower you with the knowledge and tools you need to make informed financial decisions.

 

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