Gen Z Using Credit Correctly
15 AUGUST 2023
It’s not easy being part of Generation Z. What makes it even more difficult is that 84% of Gen Z members rely on their parents and other family members for financial information.However, what if we aimed at lowering that percentage by introducing a range of tools and knowledge that Gen Z can arm themselves with as they take the plunge to tackle their finances on their own? If you belong to Gen Z or want to brush up on your financial skills in general, this is the ideal article for you.
Here are 6 Facts about Credit Gen Z wish you told them
Number 1: Finances can be fun
Keeping track of your finances does not have to be a bore, here’s how you can shake up tracking your finances and have some fun while doing it!
Create your own, unique game:
Have you ever heard the term ‘Practice makes perfect’? It’s true, being savvy with your finances doesn’t happen overnight – it takes time and practice.
Set realistic saving goals:
Setting financial goals is key to financial well-being. Depending on your goal, it could be set over a short term, medium-term or long term. To ensure you stay on track and disciplined – we advise you set your goals using “SMART” objectives. “SMART” stands for:
- Specific – What goal have you set yourself?
- Measurable - Do you have a set amount or set parameters to measure whether you have succeeded or failed when it comes time for a review?
- Achievable – Are the measurable goals realistic for you to achieve in your current financial situation?
- Relevant – Is the chosen financial aspect a relevant part of your life? i.e. something you do often that will make a big difference to your financial wellbeing?
- Trackable – Do you have appropriate ways to monitor your success to gauge whether you are still on track with your goal?
Get a friend or loved one involved:
One of the biggest issues surrounding finances is that of stress. It is often a factor that overwhelms people who then crack under the pressure and end up worsening their financial situation as they are not able to think clearly. Sharing your learning experiences with a loved one or friend when taking financial courses creates a safe and comfortable environment for everyone involved.
Number 2: Your money goes beyond your own wallet
Planning your personal finances should not just be focused around you – it should include provisions for unforeseen situations that arise such as when a family member gets sick or their car breaks down and they need your assistance. Having a savings account or an emergency fund in your name can be beneficial in a time of need, especially when done over a long term timeline. You can also do more for others while you manage your personal finances. Choosing where you bank based on their contribution to your local community or based on their general good causes they support/sponsor will give you both peace of mind in terms of your financial situation, whilst also making you feel good for supporting a worthwhile cause while you do it.
Number 3: Budgeting including day-to-day spending is important
One of the best habits for long term budget success is to put a set amount of cash aside after every paycheck you earn. Analyse your finances and determine a comfortable amount you can put away every month, and deposit it monthly into a savings account. These seemingly small contributions will add up with every month, all while you gain interest every year. This could pave the way for long-term financial situations such as putting a deposit down on a house. Lastly, be cautious of the amounts you spend on things like credit cards. Always ensure you are spending less than your monthly salary to avoid getting caught out in situations where you cannot afford to pay back your credit card – which could end up getting you blacklisted for any form of credit.
Number 4: Building your credit and credit history is beneficial
Building and improving your credit score while having a positive credit history are key steps in being offered better credit repayment options in the future. Here 4 ways you can positively build your credit score:
1. Set a budget and stay within it.
Setting a budget allows you to better gauge financial decisions. Questions you could ask yourself may include – have I budgeted enough to pay this back over the required payment period? If not, rather save up and re-evaluate it when you are in a better financial position.
2. Borrow within your means
It sounds simple, yet it can be seen favourably in the eyes of banks and other financial institutions that you are seen as being responsible and not living outside your means. Furthermore, it shows you are dependable as you are able to pay outstanding amounts back consistently, on-time – aspects that make you a good candidate for future credit such as a personal loan to purchase a house or vehicle.
3. Pay your bills on time consistently
Whether you pay your bills on time is one of the biggest deciding factors when it comes to building a positive credit score, and as a bonus, you will avoid having to pay late fees and can avoid that extra cost by being diligent with your payment times.
4. Check your credit reports at least once each year
Being aware of what is on your credit report can help prevent any errors that may be costing you unnecessary finances per year, whilst constantly being aware of your credit report may allow you to make necessary adjustments that you see fit. We’d recommend using one of these 6 sites to check your credit score for free.
Number 5: Saving and planning for future debt
As mentioned above, one of the best habits for long term budget success is that of putting a set amount of cash aside after every paycheck you earn. Analyse your finances and determine a comfortable amount you can put away every month, and deposit it monthly into a savings account. As this amount grows with interest it will allow you to plan for and tackle any future debt that comes your way.
Number 6: Regularly combine points 1-5
Each of the above mentioned 5 points has its own benefits and advantages when it comes to learning how to better manage and plan your finances. However, when used in combination with each other it forms a solid set of ideals that are set to ensure you better your financial position.