Financial planning tips for new taxpayers: The Gen Z

Gen Z (born between 1997 and 2015) is the first generation to grow up in a digital world and this has provided them a different world-view. Naturally, their perspective on life, career, finance etc is different from the previous generations. Gen Z is in an enviable position to take advantage of the opportunities made accessible by technological shifts of this era.

Considering that financial services have benefitted from the rapid advancements in technology more than many other businesses, the opportunity to democratize access to a variety of bespoke financial solutions is tremendous. Many financial products and services were directed towards affluent pre-retirees for a really long time, leading to lower awareness and adoption among the masses. Financial advisory was a reserve of the ultra-rich while others relied on relatives or friends for advice. This has undergone a major shift. Today, advice is available everywhere, in fact there is a deluge. In the present world where anyone can post financial advice on social media, the challenge is about getting facts and information from a source that is trustworthy. So, while Gen Z may have different viewpoint on the money matters than previous generations, there are still a couple of timeless lessons that have universal application.

Your financial goals will probably change over time but the practice of setting them and investing some time to think about the future is a good exercise that can assist you in framing your unique financial roadmap.

Personal Finance Tips for Gen-Z!

It is important to be Disciplined

Being disciplined in personal finance space is an absolute essential in light of the fact that, in life there is plenty of potential to make poor financial choices. With discipline, one can be in complete control of one’s financial life. In fact, it opens the door to new opportunities that permit you to excel financially. Regardless of what you want to accomplish, financially or in general, discipline is necessary to reach your goals and get you where you want to be. 

Getting the basics correct will help in setting a solid financial foundation by allowing you complete financial freedom in the future. The fundamental premise of Earn-Save-Spend vs Earn-Spend-Save forms the basis of financial discipline. By saving and investing early, your future self shall reap the benefits of those early efforts.

Budgeting is the Key

Budgeting is quite possibly one of the most discussed habits and justifiable too. Having a budget diminishes the odds of living on the edge and increases the chances of saving money. Making a budget takes some effort, yet over time, budgeting becomes second nature and a way of life. A good habit to form!

Save for Emergencies

Emergency funds are such an impactful part of personal financing that it’s worth discussing again. Basically, an emergency fund is a savings pool that is only to be utilized in case of emergencies/crisis such as loss of job or an unexpected medical bill. It’s a separate kitty, kept aside from the typical savings.

After establishing an emergency fund, you can then follow your quest in different areas of personal finance, including protection (insurance), wealth creation and goal-investing, where you can begin putting your money to work for you. 

Be Proactive, Not Reactive

Planning for things that haven’t occurred yet can feel illogical, however, it’s just when it’s too late to return and the sense of disappointment that you didn’t make a move sooner, that one understands its importance.

Anticipating things such as starting a family or saving for retirement is hard to do when you’re young. It’s easy to wait until the time comes to begin preparing. But by being proactive and planning ahead you can be ready, both mentally and financially.

The Bottom Line

The seasoned half of Gen Z is beginning to enter the corporate world and it’s essential to get proficient in the language of money so that you can make the best financial decisions for yourself.
 
There’s a great deal of data out there on YouTube which can be useful, however not all advice is equal. Getting information from a trusted source can assist in ensuring it’s to your greatest advantage and by remembering these lessons, you can put yourself years ahead of your fellow Gen-Zers!

(By Ashish Misra, Chief Operating Officer – Retail Banking at Fincare SFB)