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What should Gen Z know about managing money?

While it’s no secret that young people can find out pretty much anything via the internet and social media, it’s still worth knowing the basics when it comes to managing money. Here’s the essentials to get you started.

As a larger proportion of Gen Z enters the workforce, more of us are having to fully wrap our heads around managing money and understanding budgets.

We’ve also taxes to think about, self-assessments, mortgages, deposits, debt, and a bunch of other fun buzzwords that spark joy in all of us.

To get you up to speed, we’ve put together a few tips and tricks to fully understand how to look at personal finances and make the most of banking.

Financial literacy is now more important than ever, and with Boris Johnson set to raise National Insurance rates in the UK pretty soon, we’ll need all the pennies we can salvage.

Ensure you understand the value of money

This first one is perhaps more about parenting than it is Gen Z know-how, but understanding the intrinsic value of cash is important to establish long-term, responsible saving skills.

Getting to grips with how vital money is to good quality of life, prospects, and general opportunities is worth doing as young as possible. That way, you’ll avoid blowing your first pay cheque on useless tat and put at least a little in the savings pot.

Consider a side hustle or a freelance opportunity

We know that side hustles and the toxic ‘sleep when I’m dead’ culture can cause burn out and problems, but having a manageable source of extra income can be hugely useful in achieving monetary goals.

We’re not saying that you need to exhaust yourself, nor do we want to be put into the same bracket as ‘self-help’ TikTokers that say to work to the bone. However, if you’re currently working part-time, or for a full-time job that isn’t in the field you want to eventually create a career, consider looking into freelance work.

Extra cash on top of a salary can be helpful in making dreams a reality. Just don’t overstretch beyond reason!

Make sure you have a nest egg/emergency fund

Speaking from personal experience, getting a back-up fund together can make unpredictable life changes a lot less stressful. If your salary allows it, try to put away enough to fall back on should a sudden house move or job switch be required.

Consider specific savings or ISA accounts too, which sometimes offer extra interest rates and cash for nesting money. They’re harder to come by these days – most current accounts offer nearly no interest – but can be useful if you pick one that’s suitable for your needs.

Be sensible and wary of debt

It might seem obvious, but always be wary of loans, particularly short-term payday borrowing that can quickly build up to eye-watering interest returns.

Get clued up on loan term agreements, how borrowing works, and make sure to read the small print if you’re ever in a position to borrow cash. If it’s possible, try to get your bills, rent, and anything else paid on time, as it helps your credit score for future mortgages and loans.

Live within your means and never take out more than can be reasonably returned! It may be common sense, but we’ve seen from previous generations of money handling that things can unexpectedly spiral out of control. Just take a look at the 2008 crisis, for example.

Try to avoid splurging and overspending

Another seemingly redundant point, but overspending is very easy to do, especially when first introduced to regular disposable income. Deliveroo and Uber Eats suddenly look a whole lot more tempting when they don’t break the bank.

PayPal transactions can quickly add up, however, especially if you’re venturing into town a few times a week for drinks and socialising. Give yourself a reasonable budget to stick to that allows some wiggle room and accidental drunken purchases. Trust us, you’ll want to have a buffer.

Consider investing if you’ve the extra cash to do so

Research shows that Gen Z are very interested in investing, which isn’t much of a surprise considering all the hoopla around the stock market, dodge coin, bitcoin, NFTs, and everything in between over the last few years.

According to GOBankingRates, there are five key ‘hot investment areas’ that are probably worth diving into this year, if you feel confident enough to jump.

Companies that promote sustainable practices are all the rage, especially with younger investors who care deeply about the climate crisis. Big brands such as Beyond Meat and Tesla are safe bets with stocks, as they’re likely to increase in popularity and profitability in the coming years.

Remember that whole reddit GameStop fiasco earlier this year? Meme stocks are the new-age answer to traditional brokers, and will likely be a permanent part of the market from hereon. Be wary though – the bubble on these types of investments can burst with no warning.

Other areas include space travel and tourism, autonomous vehicles, and Fintech. All these are worth looking into if you’re tempted to invest, and you can even use robo-advisors to help make the right decisions. Capital is obviously at risk with this one though, so be careful!

Those are our biggest tips when it comes to managing money – any we missed? Let us know via the comments or our social media accounts, we’re all ears.