Writer: MICHEAL OGWUDE
Finance is an essential aspect of everyday life, especially in today’s fast-paced world. Gen Z is a generation born between the late 90s and early 2010 who are entering adulthood when the financial state of the world is very challenging.
This is why, as a Gen Z, you must have a thought-out plan to stay ahead and build yourself strong personal finances. In this article, you will learn five personal finance tips to help you prepare yourselves for your future.
Make sure to read to the end of the article because there’s a bonus tip that can go a long way for you.
1. Clear Budget Plan
The foundation of sound financial management is a well-crafted budget. Track your earnings, allowances, and other sources of revenue to construct a budget, then compare it to your out-of-pocket spending.
You can build and manage your budget with mobile apps and online tools. You may reduce wasteful spending and make well-informed decisions by knowing where your money goes.
2. Apply the 50/30/20 Rule
A straightforward formula known as the 50/30/20 rule can assist you in managing your income:
- You should set aside 50% of your salary for necessities like electricity, groceries, and rent.
- 30% can go into wants like entertainment, eating out, or the newest technology.
- 20% of your income should go toward savings, which can be used for debt repayment, retirement savings, or an emergency fund.
By following this guideline, you have better control over your finances.
3. Make Wise Investments
Investments are like long building projects, but once it is completed, you can enjoy living in your home. Diversify your investments to spread risk and exploit opportunities in different markets. Consider investing in low-cost index funds or exchange-traded funds (ETFs).
Start small if you’re new to investing, and gradually increase your investment portfolio as you gain confidence and knowledge.
4. Have a Side Hustle
Consider starting a side hustle or doing freelance work in your spare time. Popular gig economy platforms like Uber, Airbnb, or Upwork provide flexible ways to increase your earnings and bolster your financial stability.
5. Avoid Impulse Spending
In a world of instant gratification, it’s easy to give in to impulse purchases. To fight this urge, try implementing a “cooling-off” period before making non-essential purchases.
Give yourself 24 to 48 hours to think it over and decide if it’s a wise use of your money. You’ll be surprised at how many impulses buys you can avoid with this simple trick.
6. Don’t Compare Yourself to Others (Bonus Tip)
In the age of social media, it’s easy to fall into the trap of comparing your financial situation to your peers. Everyone’s financial journey is unique, and appearances can be deceiving. Focus on your goals and economic well-being. See yourself being in a competition with yourself rather than with others. This way, you can make financial decisions that are best for you.
Conclusion
It’s never too early to begin the lifelong adventure of mastering personal finance. The advantage of Gen Z is that they have access to digital information and tools that make money management more effortless than before.
Gen Z may succeed in the long run and overcome today’s financial obstacles with self-discipline, knowledge, and perseverance.
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