Generation Z appears to be more financially literate when compared to the preceding generations. Exposure to smart, modern technology has impacted their financial literacy, allowing them to make decisions that affect their investment plans. There are various efficient and smart methods Gen Z can use to save on their small budgets and make smart investment plans, including:
1. Automate savings with apps
Generation Z is one of the luckier generations as they grew up in the age of modern technology, where one can access various services easily using apps on their smartphone. The use of such technology allows people to automate savings with apps. This technological method acts like a personal assistant by calculating what you can afford to save during a certain period, rounding up a percentage of your money after purchase, and forwarding the change into a virtual savings account. You don’t even have to think about it; savings automatically become part of your everyday spending.
2. Pay off existing debts
Paying off existing debt is one of the best ways Gen Z can save money and help them invest in their future. Witnessing the older generations struggle with loans and debt payments has made Gen Z more cautious of taking loans. They have also learned to take small, manageable loans that can be repaid easily without causing financial strain. Generation Z will have a stronger foundation for long-term financial planning if they actively participate in financial education on credit history and how it can be used to demonstrate one’s abilities to pay loans and mortgages, as well as debts accrued over time.
3. Reduce taxable income by investing in 401(k)s
Generation Z can contribute toward 401(k) plans which will lower the tax imposed on their total income. Reducing taxable income by investing in 401(k)s can allow one to build on future investments by channeling the amounts deducted towards important financial plans such as retirement plans. The latter can be considered one of the methods that can be used to save during working days while securing a future after retirement.
4. Invest your tax return
We all have emergencies at one point or another which occasionally requires money to sort out. Investing your annual tax returns is imperative because the tax refunds can be directed as emergency savings. Planning for unforeseen circumstances is necessary for financial security hence setting up emergency savings accounts is a crucial component of a wise financial strategy.
