Wanting to improve your financial situation is a good instinct, but at some point, people become so obsessed with cheapness and savings tricks that they forget: you’re meant to enjoy being alive, too. There are a lot of misconceptions and mysteries about being good with money: I’m not scared to talk about savings and responsible budget stuff all the time, so if anyone reads my stuff, they automatically know that I’m pretty good at it? And I do it without even cutting back on wine or couch-purchasing. It’s really surprising, apparently.
Sometimes it feels like millennial and Gen Z life has been described so many times over: avocado toast, sharing a house with a lot of people, the grind for those experience points. It’s a strange yet believable mix of nostalgia and whimsy, practicality and escapist longing. But even the most classic stereotypes of young adulthood (and the most hateful op-eds) can’t erase the fact that managing money, saving, and turning daily life into a small bit of fun when you’re young can be totally overwhelming.
One of the big recent financial challenges for Gen Z and millennials is student debt; people of these generations made the decision to go to college and business schools then face big repayments. It is a common occurrence for college students to be forced to accept internships rather than jobs in their chosen field immediately after graduation to not have income to pay their student loan. In addition, a high percentage of college graduates have to accept temporary, low-skill jobs, or no job at all. This is problematic, especially for students living on their own, with or without the help of their family. It is hard to manage in times of need with limited available income to cover main living costs like rent, grocery, transportation, and discretionary costs like clothing or electronics. With the country in a defined recession, Gen Z and millennials are in need of financial guidance that will help prevent them from making financial decision errors to achieve a better future. A first financial priority for the Gen Y members is to pay off their debt followed by increasing savings. The happiest and least stressed millennials are those who feel confident and knowledgeable about their decisions.
The millennial generation is the one presently occupying the center in our society, politics, and culture debates. Born in the 1981-1996 period, they are still actively influencing the world and future despite being affected by the steep rise in housing costs, student debt, and income inequality. Compared to Baby Boomers, millennials are delaying and re-thinking some key life decisions like home purchases and family planning. Making the right choices, millennials are faced with a world changing more rapidly than any generation which preceded them. In addition, and during the past seven years we have seen Gen Z reach maturity. The oldest members of this generation are now in the 13-23 age range and also have known economic and financial difficulties compared to the generations which preceded them, especially now that they are reaching maturity in what is perhaps the pandemic and climate troubles era.
Understanding the Financial Landscape for Millennials and Gen Z
On the other end, Gen Z is next in line to be given the moniker—millennial or Gen Z—describing the trait of being gutted by a global economic recession while their sense of certainty was still budding. Yet, even before the COVID-19 economic crisis, Gen Z—many of whom weren’t even in high school when the Great Recession gripped nearly every pocket of the worldwide economy—knew fear of untamed capitalism, social media addiction, student loans, and wealth inequality. And because their formative years ended roughly at the same time the world shut down and the global economy ground to a historic standstill, Gen Z has a lot to learn about not only how to make money but also how to spend it and cope with all the uncertainty.
Millennials (born 1981-1996) and Gen Z (born 1996-2010) are often grouped together, failing to acknowledge the significant differences between them. As of 2020, many experts agree that the oldest millennials are not particularly young anymore. The personal finance trends for millennials differ from the trends seen in Gen Z, for a variety of reasons. One explanation being that millennials went through their formative years (childhood through mid-20s) during one of the worst recessions in history, and those memories had a lasting impression on their financial behavior. However, learning the basics of personal finance was not the only thing they did during that time. Many people met their partners, got married, started their careers and families during what the Pew Research Center describes as “economic hell.”
Challenges Faced by Millennials and Gen Z
Millennials, also referred to as Generation Y, are individuals born from the early 1980s to the mid-1990s. Members of Generation Z, born from the late 1990s to the early 2000s, are on the heels of the Millennials. Both groups have encountered financial hurdles. College tuitions are higher than ever, and job prospects are not always what people had dreamed. Hence, young people must be innovative when trying to afford a decent lifestyle. A lot of suggestions given to young people boil down to: do not go out, cut expenses, and clip coupons. As a young woman who enjoys shopping, dining out, and living my life seeing movies without interruptions, such suggestions ring hollow. Looking at the struggles encountered by people my age and younger, I cannot help but wonder: wouldn’t it be fun and actually helpful for us to know how to live well for less without depriving ourselves of the pleasures life has to offer?
Budgeting and Financial Planning
As a primer, there’s a bunch of personal finance books that come highly recommended. If you’re in Europe, “I Am Worth More” comes highly recommended. In the English-speaking world, “Your Money Or Your Life” is a favorite. Your library’s shelves are likely to be full of similar books. The philosophy underlying all of these personal finance books is roughly the same: saving money is a good thing, often best learned through empirical analysis of our own individual values, driven by our own unique interests. Without fail, each one expresses the importance of spending money in a way that aligns with how people value individual experiences or the quality of their goods they select. I’m pretty terrible with tracking my expenses and know I should be much better than I am. But getting a grip on what my expenses are and where I can cut is a first step. Plus, revising your budget periodically can help shake you out of spending patterns that aren’t actually in your best interests. After all, constant saving isn’t practical or desirable. Our goal should be to get the highest amount of pleasure per dollar spent.
When in doubt, default to the boring but practical topic. I like to talk about personal finance. But real talk, it’s really darn important. That’s especially true for young people who may find themselves dealing with financial independence for the first time. For those that are seeking insight on the specifics of budgeting, the subreddit /r/personalfinance makes for an excellent primer. In the simplest terms, budgeting is exactly what it sounds like – creating a plan that outlines expected expenses. Sometimes your expenses will fluctuate dramatically, such as paying vacation expenses. Others, such as rent and health care, are much more stable. With time, you’ll become very aware of what your expenses look like.
Creating a Budget
Creating a budget allows you to really see where your money is going in a visual format, and it can help you adjust your spending accordingly. Again, financial discipline is about compromise and a change in lifestyle. If you choose to purchase tickets to a Broadway show, that may be the extent of your discretionary spending. Buying clothes, going out to eat, and other leisure activities would need to be zero in order to engage responsibly with your financial future.
Creating a budget is one of the best money-saving methods out there. However, this is something that is rarely taught. It is thought that once you do it, you need to strictly adhere to it, but this is not the case. Again, being flexible with your hard-earned money is entirely reflective of your current financial state. If you are currently managing your finances well, feel free to spend a little more. If you have been tight on money one month, practice financial discipline to recoup losses and create a cushion.
Smart Spending Habits
It can be really easy to make impulse purchases when online shopping. The one-click option can have you spend hundreds of dollars in no time. If you see something you like while browsing online, bookmark the item so that you can think about it first before purchasing. Who knows, you may change your mind the next day.
Before buying a high-ticket item, plan your bank account accordingly. Is the purchase financially reasonable for you? Are you about to blow your month’s hard earned on something you won’t care about next year? Sometimes, you may decide to wait out before making a big purchase until you have enough money saved. In the meantime, the price may drop, or your interest in the item may decrease.
Instead of instantly swiping a credit card after finding something you want, think it over. If you don’t feel like you need the item or at least really want it within a week, the urge will likely fade and you will have saved some money. After saving these small amounts on various occasions, the amounts will add up and surprise you.
Before making a big purchase, such as a television or cellphone, do some online research. Look for the best deals and check out consumer reviews. Avoid purchases that are difficult to return. Knowing what you are getting beforehand can help you avoid buyer’s remorse.
Identifying Needs vs. Wants
Be honest with yourself and tally, per month, what you save and what you spend. If the numbers don’t add up, you’ll at least know why you don’t have any cash reserves, and can decide on the changes you are willing to make to better your current situation. Always keep your eyes on the prize. If not buying those shoes, that makeup or whatever is a benefit towards your savings. Reward yourself from time to time, but do it out of funds that are aside and for this purpose only.
Hands down, the best way to save money is to identify your needs and your wants. Sometimes, as with food, it’s not completely black and white. Food in itself is a need, but delicious, expensive five-dollar coffees, thirty-dollar lunches, and takeout dinners are not. This is where things get tricky. It’s one thing to need food, but this doesn’t mean you need to spend 60% of your take-home salary on dining out at fancy restaurants and cafes, or ordering food in every night. It’s time to prioritize and even compromise. Instead, buy a coffee machine and a thermos and make your own delicious hot drinks for a saving of about four dollars. The same goes for food. Eating at restaurants and drinking in cafes are popularity- and convenience-driven, these locations charge a large premium for their services, compared to what you can prepare and brew at home. And, for most people, having breakfast, lunch and/or dinner at home alone, or with friends, is preferable to eating at a restaurant or in a public space.
Generating Additional Income
Working as a freelancer challenges people to grow and to be constantly learning something new. There are not many more benefits bigger than that of finding the perfect field and having fun with it but also earning money. Helping others at the same time! Small batches of money really add up and earned income can easily lessen the pressure of your student loans, as well as supplemental medical, retirement, and insurance benefits during retirement to avoid hefty penalties. Working at home truly can lead to more freedom and flexibility to save with the lifestyle adjustments you could even get additional benefits. The perks of a college graduate – even a broke one.
If what you want to do translates to the digital world, working from home could be another option for one or multiple side hustles. This is a great choice if you generally dislike face-to-face work and prefer to work independently. You can become a virtual assistant with companies or entrepreneurs who require additional support. Use your social skills to become a social media manager for a company. If you are good at editing, you can become a freelance proofreader for blogs, books, and other content. Your side hustle should be something you love (or at least have fun doing) and also be in a field you’re passionate about.
As easy as it is to budget and strategize, the simple hard truth is that sometimes, our current income is not enough to cover the expenses we hope to foresee. In these cases, a mobile side gig is the perfect solution. The easy access to Uber, Lyft, UberEats, and DoorDash has made it easier than ever to have a good work-life balance. Outside of transportation and delivery, there are several apps that allow you to put your talents and skills to work and start generating income that help offset the cost of your debt and bills. Choosing your own schedule while also making extra money every month is life-changing!
Side Hustles and Gig Economy
Didn’t start this journey early or well enough? Change that. Time, favorable market conditions, and discipline are powerful. Save money by successfully adopting the 50/30/20 rule. Side hustle to earn money and learn valuable lessons in entrepreneurship. Money is important for safety. There come moments when unforeseeable events happen, you are fired, or you want to quit, and you do not have the emergency, sorry, the FU fund to survive or leave the company without prejudice. You’re all about building experience by running into a variety of activities and by deciding what you enjoy doing. You are dreaming about gaining financial freedom, living the life you want by paying off student debt or buying a house. You may want to invest too. What is the solution? Am I tired of the rat wheel? Déjà-vu everyday. Online jobs and the gig economy are rising. Refusing to be confined by company rules, further generations of young minds follow the plunge and explore the possibility of running multiple job positions at the same time. They might take all types of work during their free hours – full-time, part-time, night-time, depending on their choice. The internet provides us with an expansive reach of various targeted income-generating outlets, payable through gigs.
What makes millennial and Gen Z living challenging as far as it concerns money? There are several factors – housing, education, and healthcare inflation can result in wage stagnation and underemployment. As a result, younger people are unable to save money and start a family, and make lifestyle choices. They are also subject to peer pressure and unrealistic expectations born from exposure to curated content on social media. What are the strategies to resolve these problems and help millennials and Gen Z to save money? Change their mindset, disregarding the beliefs that they must struggle to become adults, consume less, and not buy into capitalist-driven expectations. Supplement retirement funds – company retirement plans are no longer enough since they are at risk of bankruptcy. It is never too late to save. Adopt the FI/RE – Financial Independence/Retire Early – mindset. Retire early by making sacrifices to save aggressively.
Balancing Saving and Enjoyment
Easy money advice is always to be cautious of every single dollar that you don’t have to spend to go can be spent on having fun. You only live once and can only be young once, so have as much fun as possible! Within reason, that is true, but millennials and Generation Zers are realizing that in order to finance the fine art of enjoyment, they are going to have to start mastering both pleasure and frugality. There are three filters that should be used in the case of examining the newest spending habit: Is it really worth it? What you are spending should satisfy you, motivate you, and give you pleasure. There isn’t a better feeling than doing something that involves simple acts of kindness towards a loved one or being selfless and giving back, so keep that a top priority. The second one is, “If you’re going to love it, use it, wear it one time, and throw it away, you don’t need it.” Also, don’t forget to splurge here and there for a little weekend enjoyment. Third, remember that experiences are much more satisfying than things. The understanding of those three filters can be the difference between a millennial and Generation Z’er who is successful with their money and maintains a stable status in life by avoiding financial struggles, and those who struggle from paycheck to paycheck. With that in mind, here are some tips for striking a work/fun/career balance of saving money while enjoying having fun.
Millennials face a dual challenge: they’re dealing with a higher cost of living compared to their parents and are tasked with saving for their own future as well. In living more for today versus saving for the future, millennials and Generation Zers are learning new ways to save in the era of online and subscription costs. Millennial and Generation Zers are the first generations of digital natives. They grew up not knowing how to work anything that wasn’t a digital screen. Building their own careers from the ground up takes a lot more time and skill than it does for their baby-boomer or Generation X parents, who had the luxury of growing with the birth of the computer age. In addition to skyrocketing college costs, new generations are facing the highest healthcare costs in the history of the world, and the average millennial cannot afford to have healthcare.
Finding Low-Cost or Free Entertainment Options
If you are looking for low-cost or free entertainment options, there are always great ones available. Many community events are low-cost or free. Even if there is a fee, those types of events are usually lower cost than theme parks or concerts and can be just as fun. Your community center, park district, or library have many free or low-cost activities. Low-cost entertainment ideas include going to a local stable and watching the horses, taking a walk through the park or a nearby nature center, volunteering at a local event or festival to get free admission, joining a community organization that participates in cheap activities. You can also usually find many live music events, festivals, and street fairs in your local area that have free admission upon request for community volunteers. Just get involved in your local community or look online for fun free activities.
In conclusion, the ideas and perspectives shared above may help with reducing the costs of expenses that we have as millennials and Gen Z. It can be quite helpful to save money and also to plan where earnings/contributions will go when they’re paid or received. By living a creative and mindful lifestyle, scrutinizing every purchase, and being able to save or pay off debts, the idea is to allocate resources more effectively and avoid spending during cycles of earnings/turbulence!
I truly believe everyone wants to have fun and find enjoyment in life. I hope the suggestions and strategies shared above give individuals some guidance and new ideas to help save money. It is also important to have an emergency fund (short-term savings and long-term savings – this can be challenging). Many would love to travel, explore, and visit new places. However, these goals need to be managed and tackled steadily – they do not have to be achieved all at once. Your plans might change due to employment, family, or the big unknowns in life. The most important advice that I can share is to always keep a strategy of where you are – and want to be – financially. Good luck to you! It can take time and effort, but it’s well worth it – it’s your money!
We hope that this guide has given you insight into different strategies to help millennials and the new generation, Gen Z, save money in our accelerated society of high rent, debt, and expensive cities. All without sacrificing our present happiness or our luxurious goals for the future. Thanks for giving us your time, but don’t let this be the end of your studying. Continue to investigate. Continue taking advantage of technological tools to help you identify others around you with similar principles and lifestyle. Continue to connect with these people online and in the real world. Continue to discover the people and lifestyles that can support you, empower you, and help you to continuously evolve as you make more money, have more fun, and experience life wherever you are.
In this guide, we covered a variety of strategies that would allow millennials and Gen Z to save money while still enjoying a good quality of life. We delved deep into many of these strategies. We discussed having that goal, and we outlined the three Rs. We talked about having that eye-opening experience, doing your career homework, and seeking passive income. We talked about ownership and recreational & sociable objects. We emphasized finding affordable housing, and lastly, we spoke about networking. Last but not least, we concluded by researching and finding the best lifestyle savings strategies for living in expensive areas that benefit all income classes.