If you are among the new generation entering adulthood known as Generation Z, here's some important considerations to keep in mind at this early stage of your financial life.

Much has been written about the Millennial generation—those born between 1981 and 1996. Often mistakenly perceived as isolated and disengaged, these tech-savvy information sharers are in fact a globally aware, highly empathetic, and cause-driven generation, with a strong collective social conscience. But what about the generation that comes after?

Gen Z

Although generational cutoff points are by no means an exact science, Gen Z is typically used as a catch-all to categorize those born between 1997 and 2012. This means the oldest of the generation have already begun entering the workforce and earning incomes—well on the road to self-sufficiency.

While somewhat less directly impacted than their Millennial peers, older members of Gen Z also grew up amid the lingering financial impact of the 2008 financial crisis. They witnessed their parents’ nervousness over retirement savings and mortgages. On the plus side, it’s spawned a generation that’s actively avoiding debt more than any previous generation at this stage of their lives. But it’s also nurtured a much more skeptical view of what ‘money’ represents.

Like Millennials, Gen Z members have a generally more conservative, risk-averse investor mindset. They often prize life experiences more than material possessions, and tend to be strong believers in and advocates for more stringent corporate governance and socially responsible business practices. In short, as a community, they’re far more driven to ‘do good’ than to ‘do well.’

Begin Planning for the Future

As a GenZer at this early stage of your financial life, as you begin to take on increasing responsibilities, it’s important for you to start down the right path towards long-term success.

This means adhering to sound basic financial principles such as:

  • Saving more than you spend each month;
  • Establishing an emergency fund (3-6 months of living expenses) to cover any unexpected income disruptions and avoid having to access retirement savings which could trigger tax penalties;
  • Keeping debt to a minimum; and
  • Building a strong credit rating for future needs.

Keep your primary focus squarely on savings. Along with your emergency fund, try to regularly contribute to both a tax-deferred retirement savings account as well as a more liquid taxable investment account. And keep a close eye on your personal financial balance sheet (e.g., spending vs. savings) each month so you can make any necessary adjustments before issues arise.

Financial Outlook and Challenges

A Bank of America study found that Gen Z is emerging from the pandemic with a greater focus on saving and taking charge of their financial futures. In fact, the study found that 80% of GenZers have taken positive steps toward achieving their financial goals in the past year. [bullet] Despite economic-related challenges, 68% remain optimistic about their financial future. [bullet] Nearly 70% also say the pandemic influenced their financial priorities, including a greater focus on saving for future goals (33%) and living a more frugal lifestyle (19%). [bullet] Gen Z views their greatest barriers to financial success as insufficient income to achieve financial goals (46%), lack of job stability (23%) and being unable to save (21%).1

As you take on more and more personal responsibility, diligent financial planning will become increasingly important. You could try to design your own plan, but it’s often a good idea to sit down with a Financial Advisor early on to help get you on the right path towards success. The same holds true for any major life events such as marriage, the birth of a child, a major salary increase, buying a home, or receiving a significant inheritance.

Embrace Long-Term Investing

Gen Z members seemed considerably more interested in learning more about investing compared to older generations. In fact, 79% declared to be somewhat or very interested.2

Try to maximize your tax-deferred contributions to any employer-sponsored retirement plans (making sure to at least defer enough to receive the full amount of any employer matching contributions) as well as your individual IRA.

You’ll also want to take time to learn about the differences between traditional contributions (where taxes are deferred until you begin taking distributions in retirement) and Roth contributions (where taxes are paid up front but distributions are tax-free in retirement). It can be very beneficial in retirement to have a healthy mix of taxable, tax-deferred, and tax-free assets to draw from. So Roth IRA contributions— especially early in your career when your income tax rate may be low—are worth exploring.

Keep in mind too, that parents can open a custodial IRA or traditional IRA for any Gen Z children who are under age 18, and minors who have any earned income from independent part-time work such as babysitting, landscaping, etc. are allowed to contribute to the account.

Lastly, remember that despite short-term fluctuations, over an extended period of time, stock investing has proven itself the most successful way to earn above average returns and grow your personal wealth. Try not to be overly conservative with your investment allocation considering the decades you have ahead of you before retirement.

Leverage Technology for Budgeting and Debt Management

Even more than the previous Millennial generation, Gen Z is exceedingly tech savvy when it comes to information gathering and app usage. You grew up in an age where technology has been a foundational part of your life from almost day one. Not only are you competent in navigating new software, you’re better equipped with the skills required to leverage online budgeting apps as well as digital financial management tools to automate bill payment, monitor credit reports, stay on top of cash flow to avoid excessive debt, and invest.

Although some members of Gen Z have started putting money away, 73% say the economic environment has made it more challenging to save.3 In addition, credit card debt is on the rise among Gen Z members who are missing payments at an increasing rate.4

While most of Gen Z realizes that excessive debt is a bad thing, many continue to rely heavily on credit cards—a dependence that started from an even younger age than previous generations. But getting a handle on debt now can not only get your savings back on track, it can deliver continued benefits for years to come—in the form of more favorable interest rates on mortgages, business loans, and/ or loans for major purchases. Start by paying down any consumer credit cards you own, as the interest rates on these are often high.

Yours is a generation that values experiences over products. But exotic vacations and traveling the world can carry a high price tag. Try to be careful about spending money, and make a concerted effort to avoid the all too common trap of impulse spending.

Seek Advice from a Trusted Source

Did you know that talking about your particular financial challenges and money worries has been proven to have a positive effect on anxieties? The sooner you take action, the more opportunities you’ll have at your disposal and the easier it will be to alter course. Talking to a Janney Financial Advisor is a great place to start. Our team can provide answers to all types of financial questions— helping you make better and smarter financial decisions.

Working With Janney

Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship is in your best interest based on the information you provide when you complete or update your client profile.

When you engage in an advisory relationship, you will pay an asset-based fee which encompasses, among other things, a defined investment strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory accounts.

For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

By establishing a relationship with us, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences.

Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.

1. Bank of America Better Money Habits® Gen Z’s Financial Priorities, Barriers & The Path Forward, October 2021

2. Statistica 2022 https://www.statista.com/statistics/1253782/interest-in-learning-about-investing-usa/

3. "Gen Z’s Financial Priorities, Barriers & The Path Forward," Bank of America, September 2022

4. "Gen Z's Finances Are Already Tanking, and We're Not Even in a Recession Yet," BusinessInsider.com, November 2022


Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

About the author

Shurdonna Joseph

Vice President & Director, High Net Worth Consulting

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