Wednesday, October 17, 2012

Financial Advice for Generation Z






Gen Z, Zeds or Generation Net are between the ages of 13 and 22 and are computer savvy.  They can use, fix and put together almost any electronic gadget and are knowledgeable about digital technologies such as laptops, iPods, iPads, downloadable applications and social media.  

Generation Z were born into an economy that has seen high unemployment rates, increases in crime, gas, food, college tuition, utilities and other basic necessities.  Certainties for Generation X and Y may become nonexistent for Generation Z such as Social Security, pensions and stable employment.

Generation Z has been bombarded with technology and as a result has shorter attention spans to learn and grasp vital information such as financial literacy.  They are focused on the latest gadget technologies, having fun and living day-to-day. They are less concerned with their future. 

According to a new study by TD Ameritrade, Generation Z is “keenly aware of the importance of money, with their top financial concerns evenly split between being able to afford college (39%) and having a large student loan balance (39%)”.  When asked what they would do with an extra $500, 55% of Gen Z respondents said they would save it, with another 11% saving it specifically for college.

According to the study, 75% of Gen Z said saving money is important, and 41% said they have a budget and follow it closely. Among those Gen Z respondents who have a credit card, more than 56% have carried a balance for 6 months or more and only 23% pay the balance off each month. In addition, 23% of those 19 – 22 and 41% of those 16 - 18 admitted they don’t have a checking or savings account.

Approximately 74% of Gen Z stated they had not heard of 529 savings plans.  Only 35% of Gen Z respondents believe they will not be able to count on Social Security when they retire.  39% of Gen Z respondents believe they will have an inheritance, so they don't need to worry about saving for retirement.  According to an article by StartupSmart.com, Generation Z are more likely to live at home, receive financial assistance from their parents and live in cities.  These alarming statistics indicate an immediate need to educate Generation Z about financial literacy and the importance of managing your money and planning for the future.  Here are 12 financial tips for Generation Z.

  1. Track your spending. Track your spending daily, weekly or monthly.  Know how much you earn, spend and owe.
  2. Save. Save. Save.
  3. Spend less than you earn. Always spend less than you earn.
  4. Plan for the future.  Plan for retirement and perform estate planning. The sooner the better.
  5. Pay with cash. Pay for items with cash, use credit for emergencies.
  6. Loan money with caution. Loan money only if you won’t miss it.
  7. Borrow money with caution.  Apply for loans and credit only if you need it.
  8. Create passive income.  Create additional streams of income to strengthen your financial future.
  9. Don’t make decisions or purchases based on emotion.
  10. Remember instant gratification is temporary and sometimes an illusion.  Avoid buying something just it can be purchased easily, determine if the item is a need or want.
  11. Have at least 2 marketable skills to ensure you increase your chances of finding a job or staying employed.
  12. Don’t expect financial help from parents or relatives – many are struggling to make ends meet and may appear to have their finances in order but you may be surprised to find out they don’t.

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