Gen Z can learn from previous generations on how to manage their money effectively. Here are some money mistakes Generation Z should avoid.
Effectively managing finances is a serious responsibility, but everyone should be financially literate, even young people. In fact, learning early is ideal so you can form useful money habits that could guide you well into adulthood. To get you started on being well-versed on the art of handling money, here are 20 money mistakes Generation Z need to avoid.
Money Mistakes Generation Z Need to Avoid
1. Ignoring your budget
The first thing you need to have if you’re serious about managing your finances is a budget, and ignoring that budget is the first mistake you could make. It takes practice, but you’ll learn how to stick to it.
2. Eating out too often
You’re human, so it’s okay if you get lazy sometimes and opt to eat out instead of cooking the food you have at home. However, try to be conscious of how often you do this, because those receipts eventually pile up.
3. Signing up to unnecessary subscriptions
Nowadays, there are multiple streaming platforms for entertainment and mobile apps for other lifestyle needs. You may want to reevaluate your subscriptions to make sure that you’re getting the most out of them. Small monthly bills are frequent culprits in overspending.
4. Using online shopping as a coping mechanism
Retail therapy is a real thing. In some cases, it really is effective in getting you through tough situations. However, it’s not a good idea to rely on this for too long. Not only is its benefits fleeting, but it will also cause more harm than good in the long run.
5. Purchasing items to stay “on-trend”
When you spot your favorite influencer sporting the latest makeup palette, it’s difficult not to feel like you should have one, too. However, try to remember that staying on-trend when you don’t really have the means to do so is a great way to dig yourself into a lot of debt.
6. Having too many impulse buys
If you know that, by nature, you really are an impulsive person, then try to strategize on how you could keep yourself from purchasing too many unplanned things. One thing you could try is to ask someone to stop you from buying things on the spot if you can’t do so yourself.
7. Carrying too much cash
Another way to stop yourself from impulse buying is to carry less cash with you. If you have too much on your person at all times, then you’re more likely to commit to long-term expenses that you can’t really afford.
8. Splurging on a flashy car
Everyone’s dreamed of rolling up at school with a car that’s sure to be every student’s envy. But unless daddy’s loaded, this may have to stay a dream for you for a bit longer. Having a flashy car at your age doesn’t mean you’ve made it, especially if you didn’t buy it with your own money or you’re in a lot of debt because of it.
9. Relying on borrowed money
If you use a credit card that someone else is paying for, consider that you’re spending someone else’s money. You can’t be too reliant on anyone for your over-the-top spending habits since you never know when it can end.
10. Spending too much on special events
Ah yes, the winter ball or the spring formal is going to be a big day for you, but that doesn’t mean that you have to go all out. Take it easy with spending for the big day; after all, it’s the memories that count.
11. Shying away from credit cards
You may think that carrying cash is much better than using credit cards since the former feels more real. However, you shouldn’t be scared of responsibly using a credit card at a young age. It’s good way to build credit, which your future self would thank you for one day.
12. Going beyond your credit card limit
Life is all about balance, so when you do use a credit card, make sure that you respect its limit. Try to check how much you can afford to spend after every purchase.
13. Barely making it to the next payday
If you already have a job, even if it’s a part-time or freelance gig, don’t spend your paycheck all at once as soon as you get it. This is where budgeting and prioritization come in.
14. Spending 100% of your paycheck
It also isn’t a great idea to spend your paycheck in one day or on one thing as soon as you get it. Again, budgeting can help you here.
15. Paying bills late
If you’re committed to paying some bills already, try your best to pay on time. This will not only save you a lot of stress but would also help you better plan your finances.
16. Delaying investing
Is investing too complicated for such a young person such as yourself? Well think again. It’s actually better to start investing as soon as possible because that would give you more time to choose the right opportunity and to grow your money.
17. Moving out when you’re not ready
Yes, everyone wants to be self-sufficient, but the reality is it’s not possible for everyone right away. The job market and the global economy are fickle, so don’t pressure yourself to move out right away.
18. Too Many Car Rides
With ride-sharing apps like Uber and Lyft, money can disappear quicky. Limit your rides unless it’s absolutely necessary. Try use the carpool feature or see if there are rentable scooters around if you need to get somewhere quickly. Public transportation is also quite cheaper.
19. Keeping up with the Jones’s
Social media has its benefits but there’s also a bad habit of comparing yourself to others. Whether they have more stuff than you or not, whether they are better-looking than you, etc., be mindful of when you start feeling a little jealous of what others have and remind you that their journey is not your journey.
20. Not having financial goals
Being smart with your money is all about thinking in the long-term and seeing the bigger picture, which is why you need to have financial goals. For instance, you should determine how much you would need to have in your savings and your emergency fund.
Indeed, it’s much more fun going on spontaneous beach trips or concerts with your friends than curbing your impulse buys. When you’re older, however, you’ll realize that the best feeling is knowing that you’re financially secure – then you can have all the fun in the world. For now, it’s best to form effective financial management habits by avoiding these mistakes.
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