While Gen Z faces significant financial hurdles, such as rising living costs and student debt, they are finding creative ways to manage their money. Unlike earlier generations, many Gen Zers are approaching finances cautiously. Here’s how Gen Z is managing to save money.
Turning to Digital Tools for Budgeting
One way Gen Z is managing their finances is through digital tools. Budgeting apps like YNAB (You Need a Budget) and PocketGuard are popular among this generation. These apps help them track their spending, set savings goals, and avoid overspending.
According to a Betterment survey, 78% of young investors reported having some form of emergency savings, up from 59% in 2022. Even though many still struggle to save large amounts, the increasing use of technology is empowering Gen Z to make smarter money moves. With financial education accessible through apps and online platforms, they can build financial plans tailored to their needs and habits.
Embracing the Gig Economy and Side Hustles
Gen Z has embraced the gig economy as a means of increasing their income, allowing them to save more money. Platforms like Uber, Etsy, and Fiverr enable young adults to earn extra income while maintaining flexibility. This additional income is often put towards savings or paying off student loans, two common financial concerns for this generation.
A study by Bank of America revealed that 75% of Gen Z members are actively looking for ways to earn additional income. For many, this means working on side projects outside of traditional full-time jobs. This entrepreneurial mindset is helping them accumulate savings faster, even as they face higher living costs.
Opting for High-Yield Savings Accounts
To make their savings work harder, many Gen Z individuals are turning to high-yield savings accounts. These accounts offer higher interest rates than traditional savings accounts, allowing their money to grow faster. This approach helps Gen Z build their emergency funds or save for major life goals, such as buying a house or traveling.
Financial experts recommend high-yield savings accounts as a practical way for young people to shield their money from inflation while growing their savings. By choosing accounts with no fees and easy access, Gen Z is optimizing their savings.
Focusing on Debt Repayment
Another smart financial move Gen Z is making is focusing on repaying debt, particularly student loans and credit card debt. The rising cost of education has left many young adults with substantial student loan debt, which can be a major burden. To combat this, many in Gen Z are aggressively paying off their loans while avoiding additional debt by spending within their means.
Many financial advisers are encouraging young adults to build emergency savings first before tackling debt to avoid falling deeper into financial trouble. This dual approach—saving and debt repayment—is helping Gen Z manage their financial responsibilities while still building a safety net.
Investing Small Amounts to Build Wealth
While many members of Gen Z may not yet be able to invest large amounts, they are increasingly using micro-investing apps like Robinhood and Acorns. These apps allow them to invest small amounts of money in the stock market, making investing accessible even on a tight budget. Over time, these small contributions can grow, helping Gen Z build long-term wealth.
Despite financial challenges, Gen Z is showing a greater interest in investing at a younger age than previous generations. According to a Bank of America study, many young adults are already focusing on building wealth through investments. This long-term strategy is part of their broader goal of achieving financial independence.
Gen Z’s Path to Financial Security
Gen Z is navigating a complex financial landscape, but they are finding smart ways to save money. By using digital tools, engaging in the gig economy, and focusing on both saving and debt repayment, they are building a path toward financial independence.
While they face economic challenges, Gen Z’s resourceful approach to managing money demonstrates their adaptability and resilience. Through strategic planning, they are laying the foundation for a financially secure future, even in the face of rising costs and student debt.
