Yahoo Finance Gen Z Women Are Falling Behind on Their Financial Goals: 7 Things They Must Do Now
According to a recent survey conducted by GOBankingRates involving over 1,000 women over 18, only 7% of women ages 18-24 said they were on track to achieve their financial goals. Notably, less than 10% of females ages 25-34 feel on track. As young people struggle with stubborn inflation and challenging economic times, it makes sense that many feel like they’re falling behind and unable to reach their financial goals.
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In this article, we will explore possible reasons why Gen Z women could feel like they’re falling behind and what they can do to change their financial situations.
Why Do Gen Z Women Feel Like They’re Falling Behind With Financial Goals?
What are some possible reasons for this age group feeling like they’re falling behind financially?
Balance Can Be Difficult To Find
“Striking a balance between enjoying youth and pursuing financial stability can be a daunting task, especially in times of financial strain,” said Akeiva M. Ellis, a CFP and expert contributor for Annuity.org. “Many young adults find themselves torn between seizing the moment and laying the groundwork for future financial security.”
When you’re young, it can be challenging to balance trying to enjoy yourself today and planning for the future. This balance becomes increasingly difficult during periods of high inflation as everything costs more, and it’s not always easy to put money aside after your bills are paid.
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Higher Cost of Living
“Gen Z is navigating a time where the cost of living is higher than ever, and inflation persists, making it harder to save money or budget while still being able to afford everyday essentials and bills,” shared Lori Mitchell, director of financial services at Golden 1 Credit Union.
According to a study conducted by TransUnion, Gen Z made less than millennials at the same age a decade ago as of the last quarter of 2023. The study points out that the lower income can be attributed to Gen Z growing up through a higher inflationary period, with a cumulative rise in prices of 32% since 2013.
This higher cost of living caused by inflation can make it more challenging to save for the future and get serious about accomplishing financial goals because it could feel like all your money’s going toward bills. When you’re struggling to get by, you may feel like you’ll never be able to accomplish some of the financial achievements that previous generations did.
What Are 7 Things Gen Z Women Must Do Now
There are seven things that Gen Z women can do right now to improve their financial situations.
1. Set Realistic Goals
“Many may not be setting SMART goals, leaving them unsure of what progress looks like or how to measure it,” Ellis said. “Without clear objectives, it’s easy to feel lost or overwhelmed.”
It’s easy to feel like you’re behind when you’re not setting realistic goals that you can work toward. While we may aspire to have the same possessions as previous generations, it’s crucial to remember that it took them decades to get established.
Ellis shared her solution based on the SMART goal-setting model:
“Setting Specific, Measurable, Achievable, Relevant and Time-bound goals can provide the clarity and direction needed to make meaningful progress.”
You’ll want to start by listing realistic goals you can try to achieve next year. These can involve paying down a credit card balance or trying to build up your first emergency fund.
Mitchell advocated for the importance of beginning to plan from an early age: “Life-changing events such as buying a home or starting a business are less daunting if you’re prepared.”
This leads us to the next point…
2. Stop Trying To Follow Unrealistic Expectations
A common reason for feeling behind is comparing yourself to unrealistic standards and expectations. With the rise of social media, many young people see unrealistic lifestyles daily. You may feel behind when you see that others appear to be living better than you.
“In today’s day and age, we often compare ourselves to our peers, but there is no comparison when it comes to finances,” shared Melissa Murphy Pavone, a CFP and director at Oppenheimer & Co. Inc. “Each individual’s finances are personal and specific to them. There is no rule of thumb for how much money you should have saved at a certain age.”
When you constantly get reminded of unrealistic lifestyles, you may feel behind when you’re doing your best to try to get by.
“Unrealistic expectations in today’s economic landscape can lead to feelings of frustration and stagnation,” Ellis said. “With challenges like high inflation, soaring student loan and credit card debt, and a competitive job market, traditional markers of success, like owning a home, may seem increasingly out of reach.”
3. Live Below Your Means
On a similar note, you want to ensure that you’re living below your means so that you’re not racking up credit card debt to maintain a lifestyle you can’t afford yet.
“The most important thing to do is to commit to spending less than you make as a general philosophy,” said Anne Lester, a personal finance and retirement expert.
A general sentiment among most financial experts is that living below your means is important until you can get your finances on track. You want to ensure that you fund your retirement accounts before you purchase a car or that you pay down debt before planning your next trip.
“The secret to building wealth is living below your means,” Pavone said. “You need to be clear on the income coming in and the expenses going out.”
How can you ensure that you live below your means?
Pay yourself first. Every time you get paid, you want a percentage of your income to go directly to savings.
Track your expenses. You want to know where your money’s going so that you can make adjustments when needed.
Reduce unnecessary costs. Review your expenses often to eliminate fixed costs you no longer need.
4. Avoid Lifestyle Creep
“As your income increases, lifestyle inflation creeps in,” Pavone said. “Avoid the urge to spend more as you make more.”
A common consideration among the expert advice was to watch out for lifestyle creep, which happens when you increase your spending as your income increases.
“Every time you get a raise or some extra money (bonuses, gifts, tax refunds, inheritances), save at least 2/3 to 3/4 of it if you feel you are falling behind,” Lester said. Don’t let your base-line expenditures (housing and car payments especially) go up as fast as your income.”
By avoiding lifestyle creep, you’ll have more money to save and invest for the future so you don’t feel like you’re falling behind. As tempting as it is to reward yourself, you want to work on striking that balance between enjoying the present and planning for the future.
5. Set Up an Emergency Fund
You want to save money so you don’t rely on credit cards to get through challenging times. Your emergency fund will bail you out when your car breaks down or you go a few months without a paycheck.
“Make sure you have an emergency savings fund with three to six months’ worth of living expenses in a high-yield savings account,” Lester said. “If disaster strikes, you won’t have to go into debt.”
6. Invest In Your Future
One of the most important things you can do if you feel like you’re falling behind financially is to focus on investing in your future. While it may seem like retirement is a distant fantasy, time will fly, and your future self will thank you for deciding to invest due to the power of compound interest.
“If your company has a retirement account, enroll,” Pavone said. “If they don’t, open an individual retirement account or IRA.”
When you max out your retirement contributions, you build a solid financial foundation for your future.
7. Get Creative About Building Wealth
Even though the economy has made money management challenging for younger people with periods of high inflation and uncertainty, numerous innovations have made it easier to build wealth. For example, it’s likely easier than ever to start a side hustle or to learn about investing.
“Gen Z individuals are getting creative, exploring alternative paths to wealth-building that allow them to enjoy life while still making strides towards their financial goals,” Ellis said. “By embracing flexibility and innovation, they can navigate the tight financial landscape with greater confidence and resilience.”
Here are some ways that you can get creative about building wealth:
Try to make money in the gig economy.
Try to turn your passions into profits with a side hustle.
Take advantage of budgeting apps and tools.
Use social media to learn about investing and personal finance.
Follow people who are creating positive content about financial topics.
Methodology: GOBankingRates surveyed 1,001 American women aged 18 and older from across the country on between April 18 and April 20, 2024, asking eighteen different questions: (1) What is your primary financial goal?; (2) What is the biggest barrier to achieving your financial goal?; (3) If you are actively investing, what is your primary investment vehicle?; (4) If you are not actively investing, what’s preventing you from investing?; (5) How much student loan debt do you currently have?; (6) How much credit card debt do you currently have?; (7) What is your biggest obstacle to paying off your debts (credit card, student loan, medical, etc.)?; (8) What is your biggest source of financial worry/stress?; (9) What is your worst money habit?; (10) How involved are you in household financial decisions compared to your partner?; (11) Which of the following financial professionals have you utilized? (Select all that apply)?; (12) Do you consider yourself financially secure/stable?; (13) What is your biggest financial regret?; (14) Do you consider yourself bad with money?; (15) How would you describe your relationship with money?; (16) Do you consider yourself to be financially independent?; (17) Which wys do you live frugally (Select all that apply); and (18) What actions are you taking to build long-term wealth? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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This article originally appeared on GOBankingRates.com: Gen Z Women Are Falling Behind on Their Financial Goals: 7 Things They Must Do Now
