Financial Guidance Gen-Z Should Consider—From a Reformed Millennial Who Used to Overspend

      When I was in my early 20s, the financial “advice” I frequently encountered was along the lines of “Just stop buying Starbucks every morning!” or “You really didn’t need that avocado toast.” Instead of helping me understand how to manage my spending and saving relative to my situation, older generations would shake their fists at me from their metaphorical lawns, blaming my “little splurges” for my inability to become a homeowner. This constant criticism only made me more resistant. In fact, I’ll indulge in Starbucks twice today, thank you very much.

      What young millennials truly needed back then was for someone to explain responsibly using a credit card, the best methods for setting and achieving savings targets, and how to budget our entry-level incomes. Instead, I, along with many others, had to figure it out the hard way. Now, in my 30s, I own a home and carry only my student loans as debt. I've made significant progress since my 20s, when I followed a “spend now, worry later” mindset. And since millennials are no longer seen as cringeworthy (thanks, Gen Z!), there’s no better time for me to share the little knowledge I’ve gained with the next generation. Below are the financial insights I wish I had been given in my early 20s, specifically for you, Gen Z.

      I’ve never been one to acquire multiple credit cards, but I did open a couple in my early 20s. Unfortunately, I used them so liberally that I quickly hit the limits on both. Instead of recognizing them as a safety net for emergencies or a means to earn rewards smartly, I treated them as free money with little thought to repaying the balance or the impact of interest on my monthly bills.

      While it can be tempting to have a few thousand dollars available to spend, credit cards are tools, not free cash for any expenditure at any time. We understand this conceptually, but managing credit cards is often harder in practice.

      Before applying for credit cards, it is important to research available options and select one that best suits your needs and lifestyle. If you travel frequently, look for a card with a great mileage program. If you plan to use your credit card instead of a debit card and pay off the balance every month, seek one that offers cashback rewards. Whatever option you choose, ensure your credit card benefits you, not the opposite. When using a credit card, spend only what you can afford and pay off your balance monthly. This approach allows you to enjoy the advantages without accumulating a significant amount of debt.

      Investing isn’t exclusive to the wealthy

      I never considered investing until I met my husband, who possessed several investment accounts despite not being wealthy. This realization was eye-opening. My tendency to overspend and my credit card debt had made investing an afterthought. However, investing can be a smart way to save money, and starting young can lead to greater gains.

      Two essential points about investing could help lower the entry barrier for you: first, you don’t need to engage in the stock market to see financial growth, and second, you don’t need a large sum to start. You can select a brokerage to manage your investments and start by making small contributions to index funds, which are collections of diverse stocks that reflect the overall market. (The Acorns app is an excellent investment tool for both beginners and seasoned investors!) The best part is that you won’t have to overly concern yourself with the money you invest in these funds. Index funds are a long-term strategy, so while they may decrease when the market dips, they'll increase as the market grows.

      “The sneakers you purchased last year are still suitable this year… the phone you currently own works just as effectively as the new model… the product your favorite influencer promotes on TikTok will not truly transform your life.”

      If you approach investing with the mindset that you are saving for your future self, these accounts are low risk and designed for gradual growth. By starting with just $50 or $100 each month (or whatever fits your budget), and increasing contributions as your salary potentially rises, you can achieve solid returns.

      Don’t let FOMO lead to lifestyle inflation

      This is a significant issue. I squandered a lot of money in my early 20s because I couldn't say no. “No” to that night out. “No” to that weekend getaway. “No” to the latest handbag or shoes. I wanted to attend every girls' night and have the most current trends. For a period, I upgraded to the latest iPhone with every new release. I was caught in a cycle of needing to keep up with those around me, which clearly added to my debt.

      Let me clarify: the sneakers you bought last year are just fine (even if they aren't currently “in”). Your phone works perfectly well compared to the newly released model. The product that your favorite influencer is advertising on TikTok won