Financial Advice for the Generations

                                                              

Everyone should follow good financial advice whether you are 19 or 99.  The economy is uncertain and it is vital that everyone follows a plan to minimize the impact of a personal or global financial crisis.  Here are some financial tips for all generations.

Generation Z: Born between 1995 and 2015

1. Don’t live for day to day, think about your future.  Actions you take now will affect you in the future:  student loans, credit card debt, spending more than you earn, etc.
2. Save.
3. Spend less than you earn:  spend 70%, save 20%, donate 10% to charity.
4. Don’t assume someone will take care of you when you retire (government, family, etc.).
5. Do better than your parents.
6. Don’t be an emotional or impulse shopper.
7. Avoid being wasteful.
8. Pay with cash.
9. Don’t pretend to be something you are not (buying designer clothes, taking expensive trips and spending money frivolously if you live at home).
10. Get as much education as possible (college, graduate school, etc.).
11. Consider the environment when making purchases.

Generation Y: Born between 1975 and 1995

1. Plan for retirement when you start your first job. Contribute as much as possible. 
2. Become a homeowner.
3. Pay off student loans.
4. Buy health, life and disability insurance.
5. Do better than your parents.
6. If you still live at home pay rent – your parents may be struggling and not tell you.
7. Pay with cash and use credit cards sparingly.
8. Create an emergency fund to cover monthly expenses for 9-12 months.
9. Get as much education as possible (college, graduate school, etc.)
10. Consult a financial advisor.
11. Spend less than you earn.

Generation X: Born between 1961 and 1981

1. Become a homeowner.
2. Pay off student loans and credit card debt.
3. Buy health, life and disability insurance.
4. Do better than your parents.
5. Determine your net worth and ensure it is always positive.
6. Adjust financial goals and retirement contributions as needed.
7. Consult a financial advisor.
8. Spend less than you earn.
9. Pay with cash and use credit cards sparingly.
10. Create an emergency fund to cover monthly expenses for 9-12 months.

Baby Boomers: Born between 1945 and 1964

1. Ensure you are on target for your retirement goals, do an annual check-up with financial advisor to make any necessary adjustments.
2. Consider downsizing (home, car, etc.).
3. Reduce spending by 10% - 30%.
4. Contribute more to retirement if you are not on target to meet your retirement goals.
5. Pay off debt.
6. Use credit cards sparingly and pay with cash.
7. Avoid scams.
8. Borrow money with caution (reverse mortgages, etc.).
9. Use bankruptcy as a last resort.
10. Withdraw no more than 4% yearly for retirement or annuities.
11. If you have money in the stock market the allocation should be 60% bonds and 40% stocks.

The Silent Generation: Born between 1923 and 1944

1. Update your estate plan and beneficiaries.
2. Review insurance coverage and make adjustments if necessary.
3. Consider purchasing long-term care insurance.
4. Withdraw no more than 4% yearly for retirement or annuities.
5. Consider working part-time to earn extra income if you are unable to meet your financial obligations.
6. Downsize (home, car, etc.).
7. Pay off debt.
8. Use credit cards sparingly and pay with cash.
9. Avoid scams.
10. Borrow money with caution (reverse mortgages, etc.).
11. Use bankruptcy as a last resort.

The Greatest Generation: Born between 1910 and 1925

1. Ensure your estate plan and beneficiaries are up-to-date.
2. Review insurance coverage and make adjustments if necessary.
3. Withdraw no more than 4% yearly for retirement or annuities.
4. Pay off debt.
5. Use credit cards sparingly and pay with cash.
6. Avoid scams.
7. Borrow money with caution (reverse mortgages, etc.).
8. Use bankruptcy as a last resort.
9. Seek assistance from social organizations or family members if necessary.

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.