…or at least that’s what a recent Intuit study found*. According to this study, Gen Z already feels like they are behind when it comes to their finances. Might I remind you we are talking about 18–26-year-olds! Gen Z has decided that they are not ever going to be able to retire and so they are practicing something called Soft Savings, meaning that they are going at savings less intently. They are saving a bit but are focused more on personal growth and mental well-being. They don’t feel compelled to save for an unknown future.
Social media has had a lot to do with their disheartened nature. Gen Z is comparing themselves to what they see online-the glitz, the glamour-and they immediately believe they are behind in being able to live that life. They are discouraged and don’t think they have a fighting chance. They figure they want to have fun with their money instead of chasing after what isn’t possible. They want to pursue passions and have money to buy non-essential purchases. Gen Z wants work life balance and be mentally happy and strong. We all want these things but these are their top priority.
Now you might ask why am I highlighting this study? They are 25, what do they know? I think it shows a lot about how money has shifted in our society. Remember, we are teaching and creating the environment that Gen Z has learned this. Maybe the old way we’ve thought about building wealth doesn’t apply as much anymore. How can we shift how we think and talk about money so they can learn that balance? Maybe we can start with these three shifts:
1. There are rules on how to build riches.
There has always been the old rule book:
You must earn more than what you spend.
You must invest in your 401K.
You must have an emergency fund.
You must own a home and invest in real estate.
I am not knocking any of these and if you have read any of my other blogs, you know that I talk about these fundamentals a lot! However, “the rules” don’t apply to everyone. Not every rule needs to be followed or you can follow it with your own special flare! The real rule is you have to know what you are trying to accomplish. That way you know what rules apply and what don’t.
I recently had a prospect come to me and she was in her later years. She started talking about buying income properties but I could tell she didn’t know much about real estate so I started to ask questions. When I dug deeper, I found that she didn’t really want to have income properties. She wanted to feel safe with her investments as they were and real estate scared her. We did a quick plan, and she didn’t need the real estate income to get what she wanted. I asked her why she had thought real estate was the way to go, and she told me because that’s what she thought she should do. Lesson is: Don’t do what you think you should do, you could make mistakes for yourself. Do what’s right for you and your journey.
2. The goal is retirement.
Our company is called One Vision Retirement, so I know that everyone thinks that we only talk to clients about retirement planning. We do talk to a lot of clients about retirement but we also talk to them about what life looks like before retirement. What trips do they want to take? Where do they want to end up? Do you want to work until age 65 or do you want to have the freedom to do something else before then? What’s on your bucket list? Let’s get those things checked off. We can’t sustain just saving for the future if we don’t know what the future looks like and if you don’t experience life, how do you know what is will look like in retirement? Find your passions and hobbies now. Live the life you have dreamed, while saving for a future so you can continue on with a fruitful, joyful life.
3. You’ve got to make more money to be able to spend it.
There is a trap we all get into where we think if make more money, we will be able to save more. More money, less problems, right? However, statistically and from experience working with clients, that isn’t the case most of the time. When we make more, we tend to want more. It starts with rewarding yourself with a new car or new clothes and it ends up with getting a bigger house and on and on. The key to saving more is actually wanting less. Less in volume that is. If taking a 10-day vacation to Europe is really important to you, do it, but stop buying this and that on Amazon! We play the, it’s only $10, it’s only $60. I’m stressed at work so going to that fancy happy hour. I deserve to spend $100. You absolutely can spend money how you want but remember, by not being pinpointed to what you really want and just filling in short term pleasures, you won’t really get to experience the life you truly want. I have clients that make way under 6-figures that are able to live a really rewarding life. They travel and dine out. They just prioritize those experiences and grate their own cheese or take a walk with a friend rather than an expensive happy hour. Prioritization is the key. With that in place, you can live the life you want with an income.
We always are trying to teach the younger generation the rules of life, but this time, lets look at what they are doing and see how we can put ourselves in a better mindset about our money. I am in no way saying that Gen Z has it figured out and, yes, they need to be saving more than they are. However, maybe by incorporating some of what they cherish into our planning, we can show them a way to have both a stable financial foundation and still be able to enjoy the life we are given. I mean YOLO (You only live once) did become a thing over ten years ago? We had to be dreaming of it at one time.
Let’s get back to it.
If you want to get your YOLO planning in place, set up a 30-minute no obligation call with us: https://calendly.com/onevisionretire/gettingtoknowyou
Investment advice offered through Integrated Financial Partners, doing business as One Vision Retirement, a registered investment advisor. The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Integrated Financial Partners does not provide legal/tax advice or services. Please consult a qualified legal/tax advisor regarding your specific situation.