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From Z to Riches: The Gen Z Guide to Wealth πŸ’°

gen z girl holding a cake on a plate

For those born in the late 90s to early 2000s, you fall into Gen Z! Gen Z has already experienced two significant economic downturns: the 2008 recession and the 2020 pandemic, both of which severely impacted the stock and job markets. Internships were canceled, job offers were rescinded, and the job market for new grads became bleak. Today, we face a high-inflation environment, skyrocketing living costs, massive credit card and student loan debt, and a challenging job outlook. However, these economic downturns and bear markets can also present new opportunities for Gen Z to get ahead financially. Here is the ultimate Gen Z guide to building wealth, resilient in any economic environment. As a fellow Gen Z-er, here are practical tips and lessons to help you get started with personal finance.

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Live below your means

With the rise of social media and digital marketing, businesses and brands are more prevalent than ever, trying to sell you their products. Competing with others to “flex” on Instagram or show off material possessions, clothes, and cars can be tempting. While it’s okay to want nice things and work hard for them, they should not be the priority of your life. Especially for Gen Z, most are either in the process of completing their degree or starting new jobs at entry-level salaries. Create good habits with your money and stay disciplined despite the temptation to spend.

  • Budget Wisely: Create a reasonable budget and modify your spending habits based on your income and lifestyle. Download our Monthly Bill Tracker to stay on top of your expenses!
  • Save for Big Purchases: Set money aside or save up for big purchases or travel plans instead of maxing out your credit card or taking out loans.
  • Avoid BNPL Platforms: Avoid using Buy Now, Pay Later (BNPL) platforms like Klarna, AfterPay, and Affirm, which encourage overspending and poor financial habits.
  • Resist Social Media Pressure: It’s challenging to avoid the comparison game or FOMO, but remember that many people only show their best moments online.

Live at home for as long as you can

The research team from InMyArea.com found that the average monthly rent per bedroom in college towns is $735. If you have the means, consider living at home as long as possible if you attend college in your hometown or have a reasonable commute. With the cost of living at an all-time high due to inflation, living at home can be the most economical option for most students. Although you may miss out on some aspects of college life, minimizing your expenses allows you to save money and reduce debt upon graduation. Housing is one of the main non-tuition expenses in college, and living at home can significantly cut this cost. While financial aid and scholarships may cover room and board, in some cases, living on campus may be more affordable than off-campus options. For those entering the workforce instead of attending college, living at home remains a practical choice, enabling you to save on rent and build your savings or emergency fund. Housing typically accounts for 20-30% of most people’s income, so saving this expense can substantially contribute to your financial goals.

Attend a Community College for the First Two Years

woman on desk planning content on notebooks and laptop

The notion that you must attend a four-year university immediately after high school is becoming outdated. Many universities now have direct connect programs and accept credits from two-year colleges, making community college a viable and cost-effective option. According to EducationQuest, the average annual tuition at a community college is between $3,000 and $4,000, compared to $7,000 to $9,000 for in-state tuition at a four-year university. This means you can save roughly 50% on tuition by starting at a community college for the first two years.

Beyond the financial benefits, attending a community college can provide a smoother transition from high school to higher education, with smaller class sizes and more personalized attention from instructors. It also allows you to explore different fields of study without the higher costs associated with a four-year institution. Many community colleges offer flexible schedules, including night and online classes, making it easier to work part-time or manage other responsibilities.

Study an In-Demand Field or Recession-Proof Job

Most students change their major at least 2-3 times during their college career; I personally changed my major twice. It’s important to understand that earning a degree does not automatically guarantee a job or promising career prospects. Therefore, you must research the job outlook and trajectory of your chosen field and industry. Consider whether there will be a growing demand for this profession in the future.

With the rise of artificial intelligence, it’s also crucial to evaluate if your chosen career could be easily replaced or automated by AI. While economic downturns are inevitable and unpredictable, choosing a career that is resilient to economic changes and can survive recessions or depressions is essential. Additionally, make sure you actually enjoy what you are studying and can see yourself in that industry for the next several years. This alignment between your interests and your career choice can lead to greater job satisfaction and long-term success.

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The Gen Z Guide to Wealth πŸ’°simple practical tips to help you live minimally and set up your financial future! Read more on my latest blog post at Genius Finance πŸ’»#CapCut #genzfinance #rothira #collegelife

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Apply for financial aid/scholarships/paid internships

According to Education Data Initiative, the average federal student loan balance is $37,088. To combat the amount of debt borrowed, apply for as much financial aid, scholarships, and grants as possible. Start by filling out the FAFSA form each school year. Many scholarships have specific criteria, such as a minimum GPA and volunteer hours, so be sure to meet these requirements. Look into scholarships and grants offered by your state, as well as those provided by the schools you are applying to or currently attending. The more aid you receive, the less debt you’ll accumulate. If you can secure enough aid and scholarships to cover your tuition and expenses, any leftover funds will be returned to you as a refund (Cha-Ching πŸ€‘). In your later years of college, seek out paid internships to help offset living expenses while gaining valuable experience for your resume. Utilize sites such as Handshake, LinkedIn, and Indeed during your internship search.

legit scholarship websites:

Continue to beef up your skills and resume

interviewer sitting across candidate taking notes with pen

In a constantly changing job market, it’s essential to keep your resume up-to-date. You never know when you might need to look for a new job or face a period of unemployment. Continuously learning new skills can give you an edge over others and complement your existing abilities. Life is a long journey of learning and growth. Whether you go back to school for graduate-level education or pursue online certifications, these efforts demonstrate your commitment to growth and expand your skill set, giving you a significant advantage in the job market.

Here are sites that offer online Courses:

  • Coursera
  • edX
  • Udemy
  • KhanAcademy
  • Udacity

Network

Network, network, NETWORK! As the saying goes, “It’s not what you know, it’s who you know.” The next person you meet could open the door to a new job or opportunity. Make genuine connections based on shared interests, whether at school, the workplace, or through your hobbies. Surround yourself with a close community and seek advice and experience from others in your field or those who can mentor you and guide your career path. LinkedIn is a great resource for this. When applying for certain postings, I send a warm message to current employees at the company I’m interested in and ask for advice on the interview process or insights into the company culture. Whether online or in person, strong personal connections are essential to thriving in any job market.

Open a Roth IRA

woman crunching numbers on calculator sitting at desk

Get a jump on building your wealth by opening a Roth IRA. When you’re young, time is your buddy – money grows with compound interest and time on your side. The max contribution for a Roth in 2024 is $7000. Even if you can only stash away $50 a month into your Roth, in 20 years, that could balloon to $25,000 with an average 7% return rate. As a Gen Z-er, wages are no longer keeping up with inflation. It’s important to find investment opportunities that outpace inflation and allow you to live a modest retirement without having to work. What’s fantastic about a Roth is its tax-free growth, providing a solid foundation for your retirement fund. Plus, there’s no age limit to open one; all you need is some earned income. And the best part? You have the freedom to choose where to invest – whether it’s in individual stocks, mutual funds, or index funds. Take the time to research options with good return rates, growth outlooks, and dividend earnings. With a Roth, you’re in control – it’s your personal retirement account to manage as you see fit. Open your Roth IRA today with Charles Schwab; zero account fees and no minimum balance required.

Obtain a Job and Continue Living Minimally

As you approach graduation or graduate, the job search becomes a priority. If you’ve completed an internship, some companies may offer a conditional job offer upon receiving your degree. Be sure to have references who can attest to your work ethic and skills, whether those are past managers, professors, or colleagues. Practice your interview skills and highlight why you should be chosen candidate for the position. Utilize job search sites like LinkedIn, Indeed, and others to expand your search and streamline your application process.

My #1 tip is to always try and negotiate your salary upon receiving the job offer! The worst they can say is no! You can also try to negotiate the vacation time offered, 401k match, and even having relocation expenses covered.

Here are some important factors to consider during your job search:

  • Research whether the company culture aligns with your values and work style.
  • Evaluate whether the position offers hourly wages or a salary, and understand the implications for your income stability.
  • Consider the work-life balance expected, including potential requirements to work weekends, nights, or holidays.
  • Review the health insurance benefits, including coverage for dental and vision care.
  • Look into the employer’s retirement plans, such as 401k matching or other sponsored benefit plans.
  • Assess the amount of paid time off (PTO) offered, including vacation and sick leave.
  • Determine whether the salary offered meets the cost of living and expenses in your city.
  • Inquire about any sign-up bonuses or relocation expenses that may be offered.

Closing Thoughts

In the initial years after graduation, continue to live like a “broke college student”. Focus on paying down any debts or loans and building an emergency fund. If possible, consider living at home while working full-time to save on rent and groceries, allowing you to allocate more funds towards savings and discretionary spending (enjoy your hard-earned money, you deserve it!).

These are the fundamental steps for the Gen Z guide to building wealth early on. Take on the least amount of debt possible, live minimally, continue to save, and land a well-paying job! By following this guide, Gen Zers will set themselves up for financial success and freedom early on!

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