After the millennials have dominated the workforce, the members of Generation Z, or Gen Zers for short, have started their first jobs and with it, their journeys to financial freedom. This is the first generation that grew up entirely in the digital era, earning them the title of “digital natives” in the process.
Gen Zers are tech-savvy individuals who have grown accustomed to the fast-paced lifestyle where everything is mobile and instant. They didn’t have to make the transition that millennials did because they were born during a time when the internet existed and technology is slowly revolutionizing the world.
Nowadays, the members of Gen Z would simply need to connect their devices to a stable internet connection to make most of their transactions possible—local and international shopping through e-commerce stores, transferring money, ordering food, and booking flights; the list goes on and on.
They no longer have to deal with the long lines at brick-and-mortar shops when they release new items or hold year-end sales the way that the previous generations did. Instead, all they need to do is wait for the notification on their phones, place their orders, and pay their bill. All that through a few taps on their screens.
But this convenience comes at a literal cost because the money comes and goes so easily. If these Gen Zers aren’t careful, they can amass more debt than they can handle. That’s why learning about personal finance is important especially since you’re still new to the concept. Here are some tips that you can use:
Tip #1: Take Extra Care of Your Gadgets
As digital natives, Gen Zers are naturally glued to their smartphones or laptops as if those are their lifelines. But since most of their transactions and socialization can be conducted on these devices, it’s understandable that the Gen Zers put their gadgets among their top priorities, next to their fur babies.
You can only imagine how devastating and inconvenient it would be if any of your gadgets suddenly stopped functioning while you’re in the middle of work. Not only can you not continue working, but you will also need to have it serviced. That’s why you have to take extra care of all your gadgets.
For instance, if you notice any glitches on your phone, this can already be a sign of an underlying problem. It would be better to have an expert conduct a phone repair before the damage becomes worse. If you seek help a little too late, a repair might no longer work and you’ll have to replace the whole thing, which will cost you more money.
Tip #2: Learn How to Budget Your Income
Most Gen Zers live their lives by going with the flow. And while spontaneity is an admirable quality to have, the same cannot be applied to handling money. That’s because if you don’t plan how you spend your money, you might not have enough left to save. You won’t want to live paycheck to paycheck because that can be difficult.
To help you get started on budgeting, you can look into time-tested models like the 50-30-20 rule. For this budgeting rule, you’ll be dividing your income into three: 50% on needs, 30% on wants, and 20% on savings. For best results, the allocation needs to be done as soon as you receive your income.
Tip #3: Build an Emergency Fund
In life, nothing is certain. You won’t exactly know if you will still have a job tomorrow, or if you’re still going to have the capacity to work. The not-knowing can be a real thrill-seeking moment for adventurous souls, but it’s better to be prepared for the unforeseeable by building an emergency fund.
This is not to say that you need to plan your every waking moment, but getting ready to face the worst-case scenario might come in handy because you never know if you’re going to get into an accident or lose your job. An emergency fund will be able to cover most, if not all, of your expenses during that time.
In a nutshell, your emergency fund should be enough to cover three to six months of your living expenses. This can include your loan payments, rent, utilities, groceries, phone bills, and the other costs of your day-to-day living.
Tip #4: Diversify Your Income Streams
With the ever-increasing prices of commodities today, it can be difficult to achieve a comfortable lifestyle with only a single stream of income. Your primary source of income will be your full-time job, but it doesn’t have to be your only source especially if you’re spending outside of your means.
To be able to afford the kind of lifestyle that you want to have, it might bode well to diversify your income streams. This can be in the form of part-time or freelance work, you can also pick up projects that can help you expand your skill set while earning an additional income.
Experiencing financial freedom for the first time can be overwhelming because you’re finally earning your own money, which you can spend on whatever you want. But with great power comes great responsibility, and if you don’t want to accumulate debt, you have to be wise about how you spend your hard-earned money.