5 Ways Gen Z Can Approach Their Finances With a Long-Term Mindset
Gen Z is increasingly taking control of their finances. A recent Bank of America Better Money Habits study found that only 34% of Gen Z say they get financial help from family, down from 46% in 2024, and 81% say it’s important to them that others see them as financially responsible.
Still, 42% say they’re living paycheck to paycheck, and nearly half say the high cost of living is one of the biggest barriers to financial success. The gap between where Gen Z is and where it wants to be is more about the right habits than income.
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Here are five ways finance experts said Gen Z can approach their finances with the future in mind.
Think Long Term
Many young people want quick results, but wealth creation is usually a slow and steady process.
"Wealth accumulation is a long-term endeavor. It’s a marathon and not a series of sprints,” said Robert R. Johnson, professor of finance at Heider College of Business, Creighton University.
He quoted Warren Buffett, who was once asked why more people don't follow his simple buy-and-hold strategy. Buffett’s answer: “Because nobody wants to get rich slowly.” Viewing financial progress in decades, not months, will help you stay focused through market downturns and economic uncertainty.
Automate Finances
One of the easiest ways to stay consistent is not relying on staying disciplined. Johnson suggested automating as many financial decisions as you can. For example, have a set percentage of each paycheck go directly into your retirement or savings account before it ever hits your checking account.
"Once enrolled in an automatic savings plan, inertia tends to work in our favor," he said.
Ashley Morgan, a bankruptcy attorney at Ashley F. Morgan Law, echoed this: "If you automate your savings and put $200 to $300 away each month and invest it, you will be set up for retirement and likely not feel any different about your quality of life."
Avoid Lifestyle Creep
Many people immediately upgrade their apartments, buy new cars or splurge on high-end items after landing a higher-paying job or getting a raise. While it’s OK to enjoy the rewards of hard work, Morgan said not every raise has to turn into a new monthly expense.
“Make sure you have a strong foundation of emergency fund, savings and retirement before you start spending more money on luxury,” she said.
Build an Emergency Fund
Unexpected expenses are inevitable. Car repairs, medical bills or sudden job loss can quickly lead to debt if you don't have a safety net. Morgan recommended starting an emergency fund early, even with $1,000 to $2,500. Ideally, you want to have three to six months' worth of living expenses saved.
“Too many people are relying on credit cards, buy now, pay later programs or paycheck advances whenever an unexpected expense occurs,” Morgan said. “Temporary debt slowly becomes permanent debt when there is no financial cushion.”
She also recommended increasing your emergency fund as your expenses go up.
Start Investing Early
Most Gen Zers think they have the time to invest later. However, the earlier you start, the more time compound growth has to work.
“The surest way to build true long-term wealth and achieve financial security is to invest in the stock market,” Johnson said. “And time is the greatest ally of the investor because of the magic of compound interest.”
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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