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Gen Z, which refers to the group of individuals born between the years 1997 and 2012, seems to be on the right track when it comes to their finances. According to Business Insider’s profile of Gen Zers in America, the typical Gen Zer is already trying to build wealth. Because the oldest of Gen Z entered the workforce during the height of the pandemic, many were pushed to save and invest for financial stability. In fact, 38% of Gen Zers have an online investment account.

If you follow the mindset of the typical Gen Zer and build good financial habits at a young age, you’ll have an easier time staying secure throughout adulthood. You might even give yourself an edge when it comes to financial goals, such as starting a family, paying off debt, and saving for retirement. The following strategies can help you take charge of your finances as a young adult.

Start Investing

Young adulthood is the best time to start investing. As explained in Maryville University’s college investment post, investing early lets you turn small contributions into major gains, thanks to compound interest. When you place capital in assets like stocks, bonds, and mutual funds, you gain returns on your initial investment. As time passes, you will gain returns on your returns. And when you invest early, your money gets more time to grow.

Build an Emergency Fund

If you don’t have money set aside, you’ll have no safety net to fall back on should unexpected events or expenses arise. In the worst case, you might even have to take on debt to get by, which will worsen your financial situation in the long run.

To protect yourself financially, it’s important to build an emergency fund. The common rule of thumb is to set aside three to six months of living expenses. The Consumer Financial Protection Bureau’s guide to building an emergency fund also recommends analyzing whatever unexpected expenses you encountered in the past. How much did previous emergencies cost? Use that as a reference when setting savings goals.

Make a Monthly Budget

Give yourself a clear picture of your cash flow by creating a monthly budget. To start, you first need to list down your monthly expenses. Once you understand where your money goes, figure out how you can redirect it to meet your financial goals. For example, if you find that you’re spending too much on restaurant trips, try to eat out less. You’ll then have more spare cash for your emergency fund or your investments.

However, as we mentioned in our ‘Tips for Budgeting’, it’s still important to be realistic about your wants and needs. If your budget is too restrictive, you might find it difficult to follow through.

Find the Right Debt Repayment Strategy

According to a US News guide to debt repayment, two of the most common debt repayment strategies are the debt avalanche and debt snowball methods. In the debt avalanche method, you first pay off the debts with the highest interest rates. Usually, these are your biggest and most expensive debts. The debt avalanche method stops interest from growing your debt, allowing you to save more in the long run. However, since it takes a while to pay off large debts, it can be easy to lose motivation.

If you need the motivation boost, it’s better to try the debt snowball method, which instead focuses on paying off the smallest debts first. The benefits of the debt snowball method are mostly psychological: by focusing on the debts that are easiest to repay, you can build confidence as you progress through your debt repayment journey.

Money doesn’t buy happiness, but it sure saves you from stress. Building good money habits early can help you stay secure throughout adulthood.

Written by Sevana Finn