Financial Foundations: A Beginner’s Guide for Gen Z

Seattle — There are many financial guides out there, but most of them don't center on Gen Z and are written from the perspective of someone older. Here is a financial guide for Gen Z, written by someone who is Gen Z. This article breaks down the nuances of building financial foundations that’ll help you be successful in your twenties and beyond.

Establish and stick to financial goals 

To set your finances well, first, take inventory of where you currently are financially and identify where you want to be. Everything else touched on in this guide can only exist if you know your financial goals. It might be scary, but ask yourself what you want your life to look like in the next five to 10 years. Do you see yourself living in a big city and working in a specific industry? Do you want to buy a house? 

Your financial goals won’t always look like other people’s. Don’t get sucked into creating goals that you couldn’t care about. Instead, make them plain, write them down, and create a system to stick with them. If you want to save $5,000 in the next 12 months. Calculate how much you need to save on a monthly and weekly basis, evaluate if you make enough to meet that goal, open a high-yield savings account, and turn on auto-saving so the work is already done for you. 

Build credit early and manage debt

If you want to start building credit, first start by making sure if you have any bills, you are paying them in full and on time. If you desire to get a credit card, being disciplined and spending what you can afford is important. Companies like Discover offer credit cards with low credit limits to young people. You can use your credit card to pay for things you already spend money on and have available in your bank account, like gas and groceries, to take advantage of cashback and card points for shopping or travel. Never carry a balance, and always pay off your card every month. 

Onto debt. Whether it’s a car loan, student loans or consumer debt, make a plan to manage and pay off the debt. That can look like refinancing your interest rates to lower so more money is going toward your balance. Another way to manage debt or avoid it is to do research before taking out loans so you know what you’re getting yourself into, can negotiate better rates, and can overall find other ways of getting what you need without taking a loan. Although steering clear of debt is best for setting yourself up financially, that’s not always the reality. 

Create a practical budget

Most people don't like the word "budget." They feel it means they can't have fun but that's further from the truth. Budgeting provides you with a view of what your current obligations are and where you can make room for what you want. The 50/30/20 rule is always used to help create a budget, and sometimes, those numbers can look different based on your priorities, especially in situations where you might be trying to pay down debt. 

This point goes back to setting financial goals. Maybe your goal is to save $5,000 in the next year. Your budget is the plan where you can see areas where you can adjust your spending to reach that goal. You can use Nerd Wallet's Budget Worksheet to create a budget, or you use the old-school pen-and-paper method. 

Supplement Your Income

You know your financial goals and created the budget, but there is just no way you can have it all on the income you’re currently bringing in. This is the perfect opportunity to make supplemental income. You can babysit, tutor or work a part-time weekend job to make extra cash. Accept that there is more money out there to be made. Identify the talents and gifts you have, and find somewhere you can bring that to make for that additional income.

Live under or within your means (especially in an expensive city)

The greatest financial foundation is to live within or under your means. It’s hard to operate this way, but if you’re meeting your financial goals and have backed up yourself financially, then you have the freedom to spend what you have. Don’t live a lifestyle you can’t afford. 

These financial foundations should help you set yourself up to succeed in your early adulthood. 

*Disclaimer: This article serves as financial advice based on the writer's personal experiences.

Tracy Noze is a Seattle-based journalist.

Edited by Nykeya Woods