Generation Z has reached the age of being fresh out of college and new to the workforce. They should be full of hope and ideas but a new study shows half of Gen Zers are worried about their finances and don't think they're making enough money to cover the bills and set financial goals for the future.
Bankrate also shows 40% of those ages 18-26 have more savings than credit card debt, which is not the case for all age groups.
Financial professional Stewart Willis, with Asset Preservation Tax and Wealth, says being mindful of your financial future as early as possible already puts you at an advantage.
"Going into retirement broke is a really tough life. Living off social security alone is a really tough situation," said Willis, who has three big tips for Gen Z to set themselves up early.
First, enjoy the social life but pay yourself first.
In your 20s and 30s, many generally have a packed social calendar — you may start attending more weddings and all the parties that go with that. It gets expensive so Willis says it's key to prioritize keeping your savings intact before you start draining it or charging everything to keep it.
He says your goal when you're first starting out should be to have at least three months of savings if you can. One way to build that habit is to do an auto bank transfer and treat it like a bill. Even if you only set it for $20 a paycheck, it'll grow and you'll forget the money is coming out, just like that streaming subscription.
Second, he says it's critical to take advantage of a 401k if your company offers one, especially if they match. He says it's okay to start with investing a minimum of 3%-5% but you should make a plan to gradually increase that amount over the next 10-15 years.
"Every time you get a raise, increase your withholding, increase your deduction for 401k," said Willis.
Finally, he advises you to let that money build and leave it alone. Even though you can do a one-time $1,000 withdrawal for emergencies under the Secure Act 2.0, Willis says to find another way.
"Don't touch that money, do not access it. Put it away and forget about it because when it comes to retirement you'll be in a much better situation."