There’s nothing like having a financial roadmap of do’s and don’ts that can set you up for financial success. And for every generation that will look different.
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Starting your career trajectory, for example, will require a completely different strategy than, say, retiring.
For Gen Zers, it’s important to take an approach that considers where they currently are in their life.
Thankfully, GOBankingRates talked with Justin Godur, finance advisor and founder of Capital Max, and Ryan Jacobs, founder and managing partner of Jacobs Investment Management, to discuss some steps Gen Zers can take to improve their finances. Read on for their insights.
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Assess Your Current Financial Situation
According to Jacobs, the first step toward financial improvement is understanding where you stand.
“Track your income, expenses, debts, and savings. You can’t fix what you don’t know is broken. By having a clear picture, you can identify areas needing immediate attention.”
Create a Realistic Budget
Jacobs recommended making a list of all your monthly income and essential expenses, such as rent, utilities, groceries and transportation.
Then, allocate a portion of your income to savings and discretionary spending.
He said a budget is telling your money where to go instead of wondering where it went.
Godur agreed.
“When I started my career, I quickly realized the power of a well-planned budget. Track your income and expenses meticulously using tools like Mint or YNAB. By understanding your spending habits, you can identify areas to cut back and save more. Remember, a budget isn’t restrictive; it’s a roadmap to your financial goals.”
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Build an Emergency Fund
“In my experience, having an emergency fund is non-negotiable,” Godur said. “Aim to save at least three to six months’ worth of living expenses. Start small — perhaps with $500 — and gradually build it up.
“This fund acts as a safety net, allowing you to handle unexpected expenses without derailing your financial stability.”
Jacobs similarly agreed, “Life is unpredictable, and having a financial cushion can prevent small setbacks from becoming major crises.”
He also said to aim to save at least three to six months’ worth of living expenses.
“An emergency fund is your financial safety net. Start small if necessary and gradually build it up.”
Pay Down High-Interest Debt
According to Jacobs, high-interest debt, such as credit card debt, can be a significant financial burden.
“Prioritize paying off these debts as quickly as possible to avoid paying excessive interest.”
He said that paying off debt is the quickest way to a brighter financial future. For that reason, he recommended using strategies like the debt avalanche or debt snowball method to stay motivated.
Increase Your Income
“If your current income isn’t meeting your financial needs, consider ways to increase it,” Jacobs noted. “This could involve asking for a raise, finding a higher-paying job, or starting a side hustle.”
He added that your income is your most powerful wealth-building tool.
“Look for opportunities that align with your skills and interests.”
Invest In Your Future
“Investing can be a powerful way to grow your wealth over time,” Jacobs explained. “Start with low-cost index funds or ETFs and gradually diversify your portfolio.”
He said the earlier you start investing, the more time your money has to grow.
“Even small, consistent contributions can yield significant returns over the long term.”
Godur recommended the same: “Start investing early, even if it’s just a modest amount in low-cost index funds or ETFs. The power of compound interest can’t be overstated, and the earlier you start, the more you’ll benefit in the long run.”
Continuously Educate Yourself
“Education is a lifelong journey, and financial literacy is no exception. Read books, follow financial blogs, and stay updated with market trends,” Godur said.
Financial literacy is crucial for making informed decisions, Jacobs emphasized.
“Read books, follow financial blogs, listen to podcasts, and consider taking courses on personal finance and investing.”
He said knowledge is the best investment you can make.
“The more you know, the better equipped you’ll be to handle financial challenges and opportunities.”
Set Clear Financial Goals
“Having specific, measurable, and achievable financial goals can keep you focused and motivated,” Jacobs said. “Whether it’s saving for a down payment on a house, paying off student loans, or building a retirement fund, setting clear objectives helps you stay on track.”
He added that goals like these give you direction and purpose.
Surround Yourself With Financially Savvy People
According to Jacobs, the people you associate with can influence your financial habits.
“Seek out friends, mentors, or groups who are financially responsible and can offer support and advice.”
He said one’s network is like your net worth.
“Being around like-minded individuals can inspire and guide you on your financial journey.”
Practice Patience and Persistence
“Improving your financial situation won’t happen overnight,” Jacobs said. “It requires patience, discipline, and persistence. Celebrate small victories along the way and stay committed to your plan.”
Overall, he reminded readers that financial success is a marathon, not a sprint.
“Keep your long-term goals in mind and stay the course. By taking these steps, Gen Zers can build a strong financial foundation, overcome financial struggles, and pave the way for a prosperous future.”
Godur shared a similar view.
“These steps are more than just advice — they’re strategies I’ve seen transform lives. By taking control of your finances today, you’re not only securing your present but also building a prosperous future.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Planning Expert: Gen Zers Need To Take 10 Steps To Improve Their Finances
