The Gen-Z Guide to Money: Mastering Your Finances Like a Pro
Lucy Smith
Hug Team
Gen Z Personal Finance Investing
Aug 2, 2024
Hey there! Welcome to The Gen-Z Guide to Money. If you’re here, you’re probably wondering how to manage your personal finances, save up for that dream vacation, or maybe even start investing.
Good news: we’ve got you covered!
Let’s break it down in a way that makes sense and, most importantly, feels doable.
1. Why Should I Care About Money?
Let's be real—money can feel like a major stress magnet.
We live in a time where everything is more expensive, yet the opportunities to earn can feel slim. Student loans, gig economy instability, and the pressure to live up to social media standards make money management seem overwhelming.
But here’s the deal: understanding money isn’t just about paying bills. It’s about giving yourself the power to make choices that align with the life you want to live. Whether it’s about taking control of your student loan debt, building a savings buffer for your mental peace, or funding the freedom to explore your passions, getting a grip on your finances is the key to feeling less stressed and more empowered.
2. Budgeting: The Foundation of Financial Freedom
Alright, budgeting. It might sound boring, but think of it like this: budgeting is just making sure your money is going where you want it to go. It’s like telling your money, “Hey, I’m in charge here!”
It can feel like a drag, especially when you’re juggling rent, groceries, and the occasional splurge on something that makes you feel alive. When your income is unpredictable, budgeting might seem restrictive, like it’s telling you what you can’t do instead of what you can. But think of budgeting as your money map.
It’s not about cutting out all the fun; it’s about making sure your money goes where you actually want it to.
How to Start Budgeting:
Track Your Spending: Apps like Mint, YNAB (You Need A Budget), or even a simple Google Sheet can help you see where your cash is disappearing.
Set Your Priorities: Figure out what’s important to you—maybe it’s traveling, dining out, or that weekly latte. Allocate money to those priorities first.
The 50/30/20 Rule: A classic for a reason. Spend 50% of your income on needs (rent, groceries), 30% on wants (fun stuff), and 20% on savings and debt.
3. Savings: Building Your Safety Net
Now that you’ve got a budget, let’s talk savings. This isn’t just about stashing away cash for the future—it’s about peace of mind.
Savings can feel like a distant dream when you’re trying to keep up with daily expenses, let alone the unexpected ones like fixing a broken smartphone or a sudden rent increase. We get it, you're early in their careers and you may not yet have the luxury of a high income, saving money can feel impossible. But here’s the truth: even a little bit can go a long way.
When you have a safety net, unexpected expenses don’t have to derail your life.
Where to Save:
Emergency Fund: Aim for 3-6 months of expenses in an easy-to-access savings account. This is for those “just in case” moments.
High-Yield Savings Accounts: Look for an account that offers a higher interest rate so your money works for you, even while it’s sitting there.
How to Save:
Automate It: Set up automatic transfers from your checking to your savings. It’s out of sight, out of mind—but still growing.
Round-Up Apps: Apps like Acorns round up your purchases to the nearest dollar and invest the difference. It’s small change, but it adds up!
4. Investing: Let Your Money Grow
The idea of investing can be intimidating, especially when you’re bombarded with news of stock market crashes or crypto volatility. You may have seen your parents struggle during the 2008 financial crisis or perhaps you feel overwhelmed by the financial chaos of the pandemic. If that's the case then the stock market can feel like a risky gamble. But investing isn’t just for Wall Street pros—it’s for anyone who wants their money to work harder for them, rather than the other way around.
If you’re new to investing, start simple. Index funds are a great way to dip your toes in, offering diversification with minimal risk. Think of it like this: instead of betting on one horse, you’re betting on the whole race. And if the idea of picking stocks or even understanding what an index fund is feels like too much, consider signing up to the Hug Academy and we'll teach you all about it!
Investing isn’t about getting rich quick—it’s about growing your wealth steadily over time. Don’t get caught up in the hype of meme stocks or the fear of missing out on the latest crypto craze. Instead, think long-term. Time in the market beats timing the market. The earlier you start, the more you benefit from the magic of compound interest. And remember, the stock market will have its ups and downs, but historically, it’s grown over the long term.
Investing Basics:
Start with an Index Fund: These funds pool together a bunch of stocks or bonds, giving you instant diversification. Think of it as a smoothie instead of individual fruits.
Robo-Advisors: Not into stock picking? Let a robo-advisor like Betterment or Wealthfront do the work for you.
Retirement Accounts: If your job offers a 401(k), especially with a match, grab it. If not, open an IRA or a Roth IRA.
Risk and Reward:
Time is Your Friend: The longer you leave your money in the market, the more time it has to grow. Don’t stress about the daily ups and downs.
Diversify: Don’t put all your eggs in one basket. Spread your investments across different types of assets.
5. Debt: Handling It Like a Boss
Debt is a reality for most of us, and for you it's possibly a big one.
Whether it’s student loans, credit card debt, or even medical bills if you're in the US, debt can feel like a weight that’s constantly dragging you down. It’s easy to feel overwhelmed and even hopeless when you see that balance growing due to interest. But managing debt is possible—and you don’t have to let it control your life.
The first step is to face your debt head-on. Know exactly how much you owe, what the interest rates are, and what your minimum payments look like. It’s scary, but knowledge is power. From there, consider your strategy. The snowball method—paying off your smallest debts first—can give you quick wins and keep you motivated. The avalanche method—focusing on the highest interest rate debts first—will save you the most money in the long run.
But debt management isn’t just about numbers. It’s about mindset. Don’t beat yourself up over your debt. Instead, focus on what you can do today to move forward. Negotiate with creditors for lower interest rates or better payment terms.
And remember, not all debt is bad. Student loans, for example, are an investment in your future, and sometimes taking on debt is necessary to get where you want to go.
Tackling Debt:
The Snowball Method: Pay off your smallest debt first, then roll that payment into the next one. It’s all about building momentum.
The Avalanche Method: Focus on the debt with the highest interest rate first, saving you money in the long run.
Negotiate Your Interest Rates: Call your credit card company and ask for a lower rate. You’d be surprised how often they say yes!
Good Debt vs. Bad Debt:
Good Debt: Think student loans or a mortgage. These typically come with lower interest rates and can lead to something valuable.
Bad Debt: High-interest credit card debt is the enemy. Try to pay it off as quickly as possible.
6. Side Hustles: Extra Cash Without the Burnout
Side hustles aren’t just a trend—they’re often a necessity.
Whether you’re trying to pay off student loans, save for a big goal, or simply afford the cost of living, having multiple streams of income can be a game-changer. But it can also lead to burnout if you’re not careful.
Finding the right side hustle can be a balancing act. You want something that fits into your life without taking over. Gig economy jobs like driving for Uber or delivering for Deliveroo can offer flexibility, but they can also be draining and unpredictable.
If you have a skill—whether it’s graphic design, writing, or even social media management—freelancing can be a great way to earn more while doing something you enjoy. Websites like Upwork and Fiverr can help you get started.
But be mindful of your limits. Side hustles should be about extra cash, not extra stress. Set boundaries, so your hustle doesn’t become a second full-time job. And choose something you’re passionate about—if you enjoy what you’re doing, it won’t feel like work.
Finding Your Side Hustle:
Gig Economy: Think Uber, Deliveroo, or even dog walking with Rover.
Freelance Your Skills: Are you a graphic designer, developer, writer, or social media pro? Sites like Upwork or Fiverr are a great place to start.
Sell Your Stuff: Got clothes, electronics, or other items you don’t need? Try eBay, Vinted, or Facebook Marketplace.
Balancing Hustle and Life:
Set Boundaries: Don’t let your side hustle take over your life. It’s about extra cash, not extra stress.
Be Passionate: If you enjoy what you’re doing, it won’t feel like work.
7. Mindful Spending: Make Every Dollar Count
In a world of instant gratification and constant social media comparisons, it’s easy to spend mindlessly. Whether it’s on the latest tech gadget, trendy clothes, or a night out with friends, spending can be a quick fix for stress or boredom. But those little purchases add up, and before you know it, your bank account is looking grim.
Mindful spending is about making intentional choices with your money. It’s not about never treating yourself—it’s about making sure that when you do, it’s truly worth it. Before you buy, ask yourself if it aligns with your values and goals. Do you really need that new pair of sneakers, or are you buying them because everyone else is? Would that money be better spent on an experience that you’ll remember for years to come, rather than an item that might lose its appeal in a few weeks?
Focus on quality over quantity. It’s better to invest in one high-quality item that will last, rather than buying cheaper things that will need to be replaced often. And remember, research shows that spending on experiences—like a concert, a trip, or even a great meal with friends—tends to bring more happiness than spending on material things.
How to Spend Mindfully:
Reflect Before You Buy: Do you really need it? Or is it just a momentary want?
Quality Over Quantity: Invest in items that last, even if they cost a bit more upfront.
Experiences Over Things: Studies show that spending on experiences brings more happiness than buying things.
8. Financial Independence: Dream Big, Plan Bigger
For many financial independence feels like a pipe dream.
With rising costs of living, stagnating wages, and the burden of student loans, it can feel like you’re just trying to keep your head above water. But financial independence isn’t about being rich—it’s about having the freedom to live life on your terms.
Start by setting clear goals. What does financial independence mean to you? Maybe it’s about being able to travel the world without worrying about money, or perhaps it’s about starting your own business. Whatever it is, write it down and create a plan to get there. Saving and investing aggressively now, even if it means making some sacrifices, can set you up for the future you want.
Living below your means is key. This doesn’t mean depriving yourself of what you love, but rather being intentional about your spending. It’s about prioritising your long-term goals over short-term wants.
And remember, financial independence is a journey, not a destination. Every step you take, no matter how small, brings you closer to that freedom.
Steps to Financial Independence:
Set Your Goals: What does financial independence look like for you? Maybe it’s buying a house, starting your own business, or traveling the world.
Save and Invest Aggressively: The more you save and invest now, the sooner you’ll reach your goals.
Live Below Your Means: It’s not about being cheap—it’s about prioritizing your long-term goals over short-term wants.
9. Stay Woke: Keep Learning About Money
In the fast-paced world we live in, financial literacy is your secret weapon. Staying woke about money is more important than ever.
The landscape is constantly changing, with new apps, investment opportunities, and even digital currencies emerging all the time. It’s easy to feel overwhelmed by all the information out there, but the key is to keep learning and stay informed.
One challenge is that traditional education often doesn’t cover personal finance, leaving many young adults to figure it out on their own. But you don’t have to go it alone. Programmes like the Hug Academy make learning about personal finance and investing fun, easy, and most importantly doable.
Keeping up with financial news is another way to stay ahead of the game. Understanding how economic trends, policy changes, and global events can impact your finances helps you make smarter decisions. Just be sure to follow credible sources—there’s a lot of misinformation out there too.
Remember, it’s not just about soaking up information; it’s about applying what you learn to your own life. Experiment with different budgeting methods, try out new savings strategies, and don’t be afraid to ask questions.
The more you know, the more confident you’ll be in navigating your financial journey.
Resources to Keep You Sharp:
Podcasts: Check out The Financial Diet or Planet Money for quick, digestible info.
Books: Try “I Will Teach You to Be Rich” by Ramit Sethi or “Broke Millennial” by Erin Lowry.
Follow Financial Influencers: There are tons of creators on TikTok, YouTube, and Instagram who break down finance in a way that’s easy to understand.
10. Final Thoughts: You’ve Got This
Managing money might seem like a never-ending challenge, especially with all the unique pressures you face today.
From navigating a gig economy to dealing with the ever-increasing cost of living, it’s easy to feel like you’re constantly playing catch-up. But remember, you’re not alone, and you’re not powerless. The key to financial success is to start small, stay informed, and keep moving forward, one step at a time.
Whether you’re just starting to budget, saving for your first big purchase, or thinking about investing, every little action you take brings you closer to financial freedom. Don’t get discouraged by setbacks—they’re part of the journey. Celebrate your progress, no matter how small it may seem, and keep your eyes on the bigger picture.
By joining Hug Academy we'll give you the tools and the knowledge, and you just have to bring the drive to make your money work for you.
It’s not about being perfect; it’s about making progress and learning along the way. So go out there, take control of your finances, and start building the life you want.
