Financial planning for Gen Zers and Millennials requires a different approach than for older generations. These young adults often balance careers and income with student debt, buying a home, marriage, building families and saving for retirement, just to mention a few financial intentions. With only so much money and so many different expenses, Gen Zers and Millennials require guidance focused on their unique needs. Getting the right advice early on can make a huge difference in financial success later down the road.
Here are some tips to help young adults successfully navigate the financial challenges they may encounter as they move through life’s transitions:
Get Clear on Your Budget
The first step is to understand your cost of living and prioritize what matters most by balancing expenses with income. Gen Zers and Millennials can start by identifying fixed monthly expenses and tracking your spending for two months to gauge average costs. Subtract these from your after-tax income to see what’s left for debt payments, saving or other goals.
Prioritize Your Intentions
With only so much income, deciding how much to save for each of your financial intentions can be hard. Spend time prioritizing what is most important and when you’d like to achieve it. Use an online tool or a worksheet to outline goals for the next one, three and five years. Consider what progress would look like a year from now and focus your money on what’s most important now.
Automate Your Savings
Whether you’re saving for a house, car or family, automate contributions to reach your goal. If Gen Zers and Millennials can plan to pay for a big-ticket item in the next couple of years, consider a high-yield savings account. If you have a longer timeline, like five years, conservative investments could be an option. For retirement funds, invest with growth in mind. Once automated, you won’t miss the money — and you’ll soon see it grow!
Pay Yourself First
While retirement may seem distant, starting to save now will let your money grow meaningfully thanks to compound interest, where your earnings generate further gains over time. For example, investing $1,000 today and adding $100 monthly at 6% interest could grow to $8,326 in five years and $49,514 in 20 years, all from systematically saving and investing over time. One of the frequent questions we hear from Gen Zers and Millennials is how much to put in retirement accounts when there are so many other expenses to juggle. Start with what you can afford after fixed expenses, aiming to maximize your retirement contributions — especially to capture any employer match. Increase your savings as your income rises.
Have a Plan Around Your Debt
If you have student loans or credit card debt, create a plan to pay it down. Debt affects your credit score and can limit funding for intentions that are important to you. Your credit score will be key when borrowing for significant purchases like a home or car, and high balances can lead to steep monthly payments. Use an online debt paydown calculator to plan your payments and stay on track toward your other financial goals.
Navigating finances as a young adult may be challenging, but with the right strategies, Gen Zers and Millennials can lay a strong foundation for their futures. Small efforts now compound over time, bringing you closer to your long-term goals. Stay consistent and focused — each step builds a stable and prosperous financial future. It’s never too early to start on the path to reach your financial goals. A CFP® professional can equip you with the tools to start out on the right foot. Finds yours today at LetsMakeAPlan.org.
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