5 Smart Ways Gen Z Is Using Extra Income To Get Ahead Financially
In this economy, having multiple jobs or working side gigs often feels like a necessity, especially for Gen Z workers who are just getting started in their careers and might be paying student loans.
But some younger Americans are using that money not just to cover basic living expenses, but to improve their financial prospects for the future.
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Here are some of the ways smart GenZers are using their side incomes to create a sense of financial security and build better futures.
1. Building Emergency Savings Funds
Conventional wisdom recommends having three to six months living expenses set aside in an emergency savings account. If you’re not there yet, shuffling your side income into a high-yield savings account can help.
“I know Gen Zers who take their earnings from freelance work or side hustles and put that money directly into their emergency savings because they’re nervous about layoffs and unexpected bills,” said Clay Cary, senior trends analyst at CouponFollow.com.
He added that some folks are “aggressively saving” with a goal in mind, like moving out of their parents’ home and into their own place or relocating to a cheaper city.
2. Paying Down Debt
While having cash in the bank builds security, if you have high-interest debt, it’s wise to work on paying that down.
“Even cutting down a monthly payment by $100 to $200 gives you a little more breathing room,” Cary said.
3. Investments
Once you’ve built up some security, it’s smart to look into investing extra cash for the long term.
“I’m seeing more interest in investing earlier than previous generations probably did,” Cary said. “I’m not talking about huge amounts, but smaller, more consistent contributions into retirement accounts, ETFs or high-yield savings accounts.”
4. Education
One way to increase financial security is through a higher income.
Erick Parker, senior business consultant with Global Business Consultants, mentioned that his 29-year-old daughter saved money by living at home and working multiple jobs. She then invested that money in herself.
“My daughter went back to college, earned her master’s degree, and obtained another job with higher income potential. In that case, her extra income helped create a path toward greater earning power,” Parker said.
5. Entrepreneurship
Side hustles can provide more than extra cash. Establishing multiple income streams gives you a sense of your strengths and skills. It can help you decide if entrepreneurship is a path you want to pursue.
“What I find encouraging is that the smarter Gen Zers are using their side hustle money to buy optionality: Skills, ownership and small income streams that make them less dependent on one employer,” said Jared Navarre, CEO of Keyni.co. “For a lot of younger people, a side hustle is a test lab for entrepreneurship.”
Cary agreed: “I’m seeing some Gen Zers reinvest their side hustle income back into themselves, buying equipment, taking courses, branding themselves, building a small business, that kind of energy.”
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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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