What can Gen Zs teach us about Financial Budgeting?

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Financial Planning - Investment Management - Pension Planning - Estate Planning

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The oldest Gen Zs are now 27 but have had a hard life financially—Covid, social distancing at college, and entering the job market at the height of unemployment. Not to mention, the extreme market volatility over the last four years has left them unsure about their financial future and invoked a lack of confidence in financial security. 25% believe they will not be able to retire.

Despite these setbacks, there are a few things they can teach us about finance. Many have adopted a ‘getting back to basics’ approach to money. This is something that even the most affluent professional can utilise to get their finances back on track. Let’s face it: no matter how wealthy a person is, budgeting is still a major issue for most.

What is financial budgeting?

Companies need budgets to manage cash flow, assets, expenses and income. Just so, individuals need the same financial management. A budget is more than just something for someone on a limited income. A budget provides a comprehensive overview of income and expenses and how to manage finances. The expenses of a wealthy person are similar to those of a middle-class person apart from the amount, e.g. both would have mortgages and car payments and schooling commitments, but the wealthier person’s mortgage would be higher as they own a larger house and schooling would be higher as they send their children to private schools, etc.

Budgeting Habits

Loud budgeting – This is the concept of announcing your intentions to save money. Let people know you are saving money and defy expectations that the only way to have fun is to splurge on luxury and unnecessary goods. This concept can help those who struggle to save set clear boundaries. Peer pressure is one of the biggest influences on spending money frivolously, and announcing that you are not spending money to impress or keep up just because your friends are, creates a saving discipline that might rub off on them.

Cash stuffing – Probably the best saving and budgeting tool ever invented. One would think that most Gen Zs are digital tech-savvy natives who live online, but many prefer good old-fashioned cash to pay bills. The envelope method is still one of the most effective ways to keep a budget and control spending. This means sorting cash into envelopes for various expenses like rent, groceries, entertainment, clothing, fuel or transport, etc. This is especially effective in controlling disposable income. How many times have you easily swiped your card for lunch or drinks, a night out, in the mall and wondered where all the money went? It isn’t easy to keep track of a debit or credit card balance. Seeing the hard cash allows us only to spend what has been allocated. 

Soft life budgeting– While many might think the soft life approach to career and money is lazy and lacking in ambition, we can learn something from Gen Zs approach to life. Their goal is a better work-life balance and living for today. It is common to get swept up in career progression and work and forget about actually enjoying life, spending time with family and friends, and giving yourself time to recharge. Budgeting is not just for finances. Time management is just as important. Budget in some ‘you time’ in between your career and financial aspirations.

Budgeting is something that even high-net-worth individuals need help with. The financial demands of a modern lifestyle and the rising cost of living affect even the wealthiest professionals. A financial advisor can help cover any gaps in your budget, make any adjustments and give advice on better spending habits. 

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.


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