Healthy Money

3 Ways for Gen Z to Focus on their Financial Future

Just because Gen Z is more financially aware than other generations doesn’t mean that they’re immune to fiscal stresses. Let’s talk about saving for retirement, and the three best ways Gen Z can get to it.
by Julia Rubano November 22, 2019

In case you aren’t already familiar with the term, Gen Z refers to the generation directly after millennials, those born in the late 1990s and into the early 2000s. The most relevant difference between Gen Z and, well, any other generation, is their affinity for technology, as they’re the first to grow up with more tech around them than printed material. Technology is so deeply ingrained in Gen Z’s lives, in fact, that they just may be more aware of their finances and the benefits of financial literacy than, well, any other generation…!

Just because Gen Z is more financially aware than their older (only sometimes wiser) generation, however, doesn’t mean that they’re immune to fiscal stresses. Take paying for college, for example. Tuition is significantly higher than it was when Gen Z’s parents were kids… likewise, rent is higher, and everyday life things just cost, well, more! But here’s the thing: while saving for something like retirement may seem really far away for Gen Z, it shouldn’t.

That’s why we came up with these three must-know retirement tips, to help give ‘em a leg up down the line. 

1. Utilize those Employer Benefits

As exciting as it may be to get a new job, have you ever experienced that feeling of realizing the benefits said new job offers are absolutely off-the-walls-amazing? Yeah, we have too, and it’s freakin’ awesome.

Whether it’s because they’re learning from their elders’ mistakes, or they’ve done their due diligence online in order to best understand their employer benefits, Gen Z knows what’s up when it comes to getting their money’s worth and saving for retirement

It’s become much more common for employers to match an employee’s contributions in a 401(k) retirement account up to a certain paycheck percentage; translated simply, this reads something like: free money, honey! And if there’s something Gen Z understands with imminent ease, it’s the word “free.”

Even if they can’t contribute the full allotted amount, starting at a 1% contribution is still money, and it’s still free. Then, with time, that amount can go up. Gen Z has time on their side in this way, and contributing even a tiny bit will add up to something down the line. Compound interest rocks.

2. Put that HSA to Work

The best time to take advantage of the amazing benefits of an HSA? When you’re young. It’s likely that an employed Gen Z’er has a high deductible health plan that qualifies them for a health savings account. And if that’s the case, it’s a no-brainer towards serious savings. HSAs allow participants to save on taxes (when saving, spending, and investing), and pay for eligible health expenses using already-socked-away money. Oh, and it’s a great tax-free retirement vehicle. There’s literally no downside.

Investing with your HSA is another great for Gen Z to start saving money for the long term—again, playing to the age on their side. For example, after building an investment portfolio for your Starship Investing Account, all you (or anyone!) has to do is set-up automatic investments by defining a savings threshold. Once the account balance exceeds said threshold, all those extra funds automatically transfer into a Starship Investing Account. It’s that simple. Then it’s up to interest to do its thing. 

3. Understand that Good Debt and Bad Debt Are Different

In a perfect world, you don’t need loans… ever. But that’s not realistic for the vast majority of people, and may be especially relevant to Gen Z. Which is why understanding loans is key. So while debt can certainly be a bad thing, the purpose loans serve is significant. For kids to go to school and college, to put money down for a home, or even just to build healthy credit. 

The most effective way to deal with debt and see that it has a positive long-term effect is to use it as a teaching mechanism. Paying credit card and loan minimums on time, and paying back more money when possible, for instance, is great for credit health. Additionally, getting rid of high interest debt before 0% APR frees up more assets for use elsewhere… don’t pay the bank more than you owe them (if you can help it!). Hint: you can.

Retirement: It’s the End Game

Gen Z knows that retirement is the end goal. This fact alone isn’t something that most people in the older generations understood to be true. Lots of our parents and parents’ parents worked until they physically could not. This said, they didn’t exactly plan for retirement. But today, due in large part to the amount of technology-based fiscal advice that’s out there (see: Ellevest, Robinhood), Gen Z gets it. They understand that preparation is key. They’re saving more and spending less (they’re also having kids a lot further down the line than our parents did), which helps in the saving realm.


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