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Home Finance Top tips to help Gen Z keep their finances on track during a recession

Top tips to help Gen Z keep their finances on track during a recession

by Uma
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Top tips to help Gen Z keep their finances on track during a recession

Jenny Madhoo, Chartered Financial Planner & founder of SpringGen 

 

Gen Z are finding themselves entering the labour market at a precarious moment. The risk of recession is constant, and the cost-of-living crisis is taking its toll. With their working lives ahead of them, young adults at the beginning of their careers would be well-advised to play the long game and look ahead when it comes to financial planning.

Here are five top tips on how to both weather the current financial storm and put yourself in the best possible position for the future. 

  • Set aside some savings for unexpected situations

The age-old advice of saving for a rainy day is as important as ever. Try to put aside a set amount each month. A good rule of thumb is to have three times your monthly outgoings saved up, which would be enough to sustain you should an unexpected scenario arise. Considering the unpredictability of our times, however, save more than this if you can. If the thought seems daunting, remember that saving even a little each month is a good start. For example, say rent and bills is £900 per month and you spend £200 to feed yourself, to get an emergency fund of three months’ costs, that means you need £3,300.

You could have that saved within 18 months if you save £183 a month.  Or even just a year if you save 275 monthly. In my opinion, this amount of saving shouldn’t be beyond the reach of young professionals in their first job, but it does of course depend on individual circumstances.

  • Avoid taking on debt you can’t manage

Amongst older generations, conventional wisdom is often that credit cards are best avoided. They can in fact have their uses, as building up a credit score may be useful further down the line when applying for a mortgage. Be careful, however, not to become overly reliant on credit. Recent hikes to interest rates mean that paying off debt is increasingly challenging; if you do find yourself needing to pay off loans, prioritise the ones with the highest interest rates first. 

  • Know where to go for financial advice

Gen Z are colloquially known as the Zoomer generation for a reason – the internet has long been a fact of life, and this means that you have abundant resources at your fingertips. Many members of Gen Z are turning to social media for financial advice, with TikTok being a particularly popular source. While platforms like TikTok can present financial advice in an accessible and relatable way, make sure to do your research thoroughly before making significant decisions. Bear in mind that bespoke financial advice can be obtained from qualified advisers and can help to cut through the noise of contradictory information. Platforms such as SpringGen are aimed specifically at Gen Z and Millennial clients and can offer informed insights into how to achieve your financial goals. 

  • It’s never too soon to look ahead 

Finally, retirement will naturally seem like a far-off prospect for young workers. Diligent planning now, however, will pay off in the future. Auto-enrolment into a workplace pension scheme is a start, but unlikely to be enough for a comfortable lifestyle post-retirement. Try to maximise the opportunities presented by your employer; if you put in more than the minimum, there’s a good chance your employer will match your contributions, so take advantage of all benefits on offer. 

  • Shop around and be savvy about the best deals on offer 

There’s no getting around the fact that monthly expenses are increasing for everybody. You might nonetheless be able to find ways to save. Do your research: rather than settling for the easiest option, shop around when it comes to car insurance, phone contracts and holidays. There might also be certain luxuries that you’re willing to re-evaluate, such as streaming subscriptions or dining out; compromising here and there could have a surprisingly significant impact on your monthly finances.

Jenny Madhoo, founder of SpringGen, said: “The current economic climate is leaving Gen Z workers feeling the pinch. However, young adults would be well-advised to remember that it pays to be prepared. Financial advice platforms like ours offer insights into money management that are tailored to individual circumstances and values and can help you get the most out of your money. Most importantly, staying knowledgeable and informed will put you in the best possible position to weather whatever the recession may bring.”

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