6 Best Money Resolutions for Gen Z, According to Experts

From embarking on a new gym membership to cutting down on TokTok time, as 2023 comes to a close, many Gen Zers are contemplating their priorities for the new year. Following a season that often includes heightened spending, now is an opportune time for young people to not only assess their screen time — but also reflect on their financial habits.

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As members of Gen Z fall between the ages of 11 and 26, this life stage presents a crucial window for establishing enduring financial habits that can shape their future. If you are looking to set yourself up financially for years to come, here are some money resolutions and habits for young Americans to adopt to reduce financial strain in the coming year.

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Create and Maintain a Simple Budget

For Gen Zers, increasing financial literacy should be a top priority — and it starts with learning about budgeting. Implementing a practical budget in place and keeping it uncomplicated is a crucial move to make in the new year. Given this generation’s tech savviness, utilizing a budgeting app can make this task more intuitive and engaging.

“One of the most simple and effective budgets is the 50/30/20 rule,” said Kendall Meade, financial planner at SoFi. “With this rule, you should be spending 50% on essential expenses (rent/mortgage, insurance, minimum debt payments, etc.), 30% on discretionary expenses (dining out, entertainment, etc.) and 20% towards your goals (retirement, emergency funds, investing, etc.).”

By keeping budgeting uncomplicated, you can reach your financial goals, whether it’s saving for a spring break trip or establishing a financial cushion for emergencies.

Simply Start Saving

Embarking on the journey of saving money, especially for those new to the workforce, may seem intimidating. The key is to start saving small amounts consistently.

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“Open a high-yield savings account and automatically transfer even $5-10 per week,” said Seth Diener, private wealth manager at Diener Money Management LLC. “It’s not about the dollar amount at this point but rather making saving a lifelong habit. Additionally, if you have earned income from a job or side hustle, challenge yourself to save 10-20% of each paycheck. Savings help buffer unexpected expenses and your future goals like continuing education or launching a career.”

Use Credit Cards Responsibly

Building a credit history is essential for Gen Zers entering their earning years, but its equally vital to do so responsibly. Responsible credit card usage plays a critical role in helping your future self be able to make major purchases, such as buying a home or purchasing a car.

“Make sure to pay off your credit cards in full each month so that you aren’t carrying a balance whenever possible,” Meade said. “Don’t use credit cards to purchase anything that you would otherwise be unable to afford. Credit cards can have very high interest rates and sometimes, if you are just making minimum payments, it can take a very long time to pay off this debt, potentially costing you a significant amount of interest.”

Take Advantage of Employer Matching

While Gen Z might be on the younger side, it’s never too early to start thinking 40 to 50 years down the road. When you start working and get a 401(k), take advantage of employer matching. Investing the maximum to get the highest match enables individuals to benefit from tax-free money directly deducted from their paychecks, making saving hassle-free.

“Opting into your employer’s 401(k) match program, if they offer one, is free money,” Meade said. “Roughly a quarter of employees leave money on the table by not taking advantage of their match. Establish good habits early at your first job and get that free money!”

Save Your Raises and Bonuses

As young Americans enter the workforce and begin receiving bigger checks, the temptation to spend more frivolously can be strong. While it’s easy to get caught up in lifestyle inflation and buy fancier shoes and bigger cars as your income grows, it’s not a great financial habit.

“A way to avoid that is by saving/ investing the majority of any raises or bonuses you get,” Meade said. “This serves two purposes: It prevents lifestyle inflation and keeps your expenses lower now, meaning you will need less money to replace your current lifestyle in retirement, and it allows you to save more money now which can be invested and grow over time.”

Plus, it’s relatively painless as you never get accustomed to relying on this additional income.

Automate

For tech-savvy Gen Zers, automating savings can be a great way to build savings without having to rely on willpower alone.

“Automate your bill payments, savings and/or investments, for people who find that they struggle with spending for example, they may prefer to set up direct deposit so that a portion of their paycheck goes directly to savings, removing the temptation to spend the money instead,” Meade said.

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