I’m a Financial Advisor: What I Wish Gen Z Knew About Getting Help With Their Money
According to Beresford Research, the oldest Gen Zers will turn 30 in 2027, which means most have reached an age when strategizing over finances has taken on added importance.
Part of that strategy should include seeking help from financial advisors. But not all Gen Zers are aware of what the help involves.
Here are a few things Gen Z should know about getting help with their finances, according to Elias Friedman, certified financial planner (CFP), founder and senior wealth advisor at Kadima Wealth.
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How To Manage Credit Card Debt
A higher percentage of Gen Zers open new credit cards than any other age group, according to a report from FICO. This means they’re the “most active cohort” in traditional credit card adoption.
But before going all-in on credit cards, Gen Zers should learn the best way to use them. A good place to start is not charging more than you can afford to pay off quickly.
“A $10,000 or $20,000 credit card limit is not ‘income,’” Friedman said. “Getting yourself into a credit card debt cycle with high interest rates can harm your long-term financial freedom and flexibility in life.”
The Importance of an Emergency Fund
This is an “underrated” part of personal finance, according to Friedman. But it’s maybe the most important one.
Friedman recommended building an emergency fund of ready cash that will cover at least six months’ worth of essential expenses.
“Having an emergency fund gives you freedom — freedom to leave a bad job, freedom to make more thought-out decisions, and freedom to overcome a [financial] setback,” he said.
Smart Investment Strategies
When it comes to learning the right way to invest, “boring usually works,” Friedman said.
Here are a few of the things he recommended Gen Zers become familiar with.
Dollar-cost averaging
How to find investments with low fees
The importance of working with a trusted CFP
Not chasing the "next hot thing"
The Power of Compounding
When it comes to finances and investments, your 20s are “worth a lot more” than your 40s or 50s, Friedman said. That’s because when you invest early in life, you maximize the power of compounding.
Even if you only invest a small amount as a young adult, it can still have a bigger impact than “trying to catch up later in life and investing larger amounts,” he added.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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