Money Management

Gen Z personal finance speaks a language of its own. See what the latest TikTok trends can teach us about saving, budgeting, and investing for the future. [[{“value”:”

One of the most important parts of growing up into adulthood is learning how to manage your money, and Gen Z is carrying on that tradition. Just like their impact on other aspects of pop culture, Gen Z young adults are reshaping the world of personal finances with social media trends and new vocabulary.

The Gen Z age cohort is defined by Pew Research Center as being born between 1997 and 2012. The oldest members of Gen Z are turning 27 this year, and many are going through the financial challenges of young adulthood: starting careers, managing credit cards, and maybe saving money to buy a home or invest for retirement.

Many members of Gen Z have a gloomy attitude about their personal finances. Having come of age during a pandemic, economic crisis, and high inflation, 25% of Gen Zers are afraid they will never be able to retire. By coining new money catchphrases and going viral on TikTok by complaining about budgets, Gen Z people are learning how to make sense of the financial world and finding their place within it.

Let’s look at a few of the biggest Gen Z finance trends and catchphrases.

1. “Cash stuffing” — a good strategy to save money

Most people think of Gen Z as tech-savvy digital natives who want to do everything via mobile app. But many Gen Zers like to save money the old-fashioned way: by handling cold, hard cash.

“Cash stuffing” is the Gen Z nickname for the envelope method. It’s about setting specific spending goals each month, and then assigning a fixed amount of cash for each purpose.

You might have separate envelopes of:

$800 for groceries$300 for nights out with friends$200 for gas/transportation/extra car costs$200 for clothes$150 for a vacation fund

By putting cash into a few budget categories of envelopes, you can (ideally) better control your spending. Seeing a stack of bills in an envelope can also help you clearly visualize how much money you have left to make it to the end of the month.

2. “Soft life” — antidote to “hustle culture”

Gen Z has been through a lot in their young lives. Many saw their high school graduation ceremonies canceled by COVID-19, had their college years made awkward by social distancing, and entered the job market during tech layoffs and economic uncertainty.

This gloomy era has made many Gen Zers skeptical about career ambition. Instead of the hustle culture of entrepreneurship and working as hard as you can for as much money as possible, many Gen Zers are choosing the “soft life” — with the goal of better work-life balance and living for today.

3. “Doom spending” — retail therapy for the end of the world

Whether it’s the pandemic, high inflation, global wars, or climate change, Gen Z often feels as if they’re coming of age during a time of upheaval, disaster, and existential dread. To cope with the stress of the economy, Gen Zers sometimes practice “doom spending” — where they spend money that they don’t really have, because they don’t feel the future is worth planning for.

If that sounds too dark and pessimistic, keep in mind that 41% of Americans have less than $500 of savings. A recent survey from Intuit Credit Karma found that 27% of all Americans have admitted to “doom spending,” and 96% of Americans are concerned about the economy.

4. “Loud budgeting” — a declaration of boundaries and financial independence

The personal finance news for Gen Z is not all negative. One young TikTok comedian named Lukas Battle went viral with his idea for a new concept called “loud budgeting.” Instead of spending money on “quiet luxury,” or worse, suffering in silence while racking up credit card debt, loud budgeting is the idea that you should clearly announce your intentions to save money and defy expectations that the only way to have fun is to splurge.

Loud budgeting is a powerful concept because it could help people set clear boundaries. If you don’t want to go out and spend $100 on dinner and drinks with friends, you should be able to say that. If you would rather have $1,000 in your bank account than buy an expensive handbag or attend a destination wedding that you can’t really afford, loud budgeting lets you declare your intentions.

5. “Money dysmorphia” — your personal finances might be better than you think

Some Gen Zers have plenty of money, but still feel financially insecure. They worry they’re not doing well enough financially or haven’t saved as much money as they should for their age, even if they’re doing fine!

This disconnect between your financial self-image and your financial reality has been called “money dysmorphia.” If you’re in your 20s and you have an emergency fund, a retirement account, and no credit card debt, your personal finances are probably doing better than most people your age.

Bottom line

I am sympathetic to Gen Zers who worry that they will never make enough money to get ahead and who feel like the future is so bleakly uncertain that they can’t save and invest. But even if you’re young and feeling underpaid and over-burdened by debt, it’s important to have hope.

Every generation has its challenges. My parents’ generation had to worry about the Vietnam War and the 1970s economic stagnation. My grandparents’ generation had to survive the Great Depression and World War II. Throughout all these crises, most people just kept showing up, going to work, and trying to make things better.

While you’re young, keep investing in your career growth. Build relationships with great people. Try hard to make a difference. And have some fun! Your future is unwritten and can still be brighter than you imagine — no matter how much money you have in the bank.

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The maturity length of a CD dictates when you can get your money. Check out how to decide which type to open. [[{“value”:”

With interest rates currently so high, a CD (certificate of deposit) can be a great place to keep your savings. However, banks offer a lot of different CD options, and it can be hard to choose the right one for you.

The main decision you’ll need to make is on the length of the CD, or how long it takes to mature. There are pros and cons to both short-term CDs and longer-term CDs. Here’s how to choose between a 1-year CD and a 5-year CD.

Shorter CDs tend to have higher rates

In general, you’ll get the best APY (annual percentage yield) from a short-term CD. That includes both 6-month CDs and 12-month CDs. The main reasoning is that short-term CDs allow the bank more flexibility. If rates go down, the bank can drop its rates, too.

Now, that’s not to say that every short-term CD will have a good rate. Indeed, plenty of CDs of all lengths have terrible rates. The national average rate for 6-month CDs is just 1.49%.

Similarly, not every long-term CD will have a low rate. While the national average is slightly lower — 1.40% — I’ve seen 5-year CDs with very competitive rates. That said, it’s definitely a lot more rare to find high-yield long-term CDs than high-yield short-term CDs. (The only ones I can think of off the top of my head are from credit unions.)

Access vs. locked-in rates

Supposing you find both a 1-year CD and a 5-year CD that offer the same high rates, what then? At this point, you have to consider two factors:

When are you going to need that money?Do you think rates will go up or down over the next few years?

Let’s take a look at both questions to see how the answer will impact which CD you choose.

When you need the money

CDs have very steep early withdrawal penalties. I’m talking up-to-half-of-your-interest-income steep. The only way to avoid these penalties is to wait until the CD matures and withdraw your money during the grace period.

If there is any possibility you’re going to need your money within the next five years, go with a shorter CD. You can always choose to roll over the money into a new CD after the first one matures if you won’t need the money that year.

If you want constant access to your money, consider a high-yield savings account instead of a CD. The best savings accounts have comparable rates and no penalties for withdrawing your money. (There are some no-penalty CDs out there, but they tend to have lower rates.)

How rates will change

The downside to a long-term CD is that your money is locked in for the full term. The upside is that your rate is also locked in for the full term.

If you think that rates will go down over the next few years, then it could pay to lock in the current high interest rates. However, if you think that rates will increase over the next few years, then you may be better off opening a shorter CD now so you can take advantage of higher rates later.

It’s down to personal needs

As with pretty much anything in finance, the best option will depend entirely on what you need out of your CD. If you want a good rate and flexibility, a 1-year CD is better than a 5-year CD. If you want to lock in your rate and can spare the money for the full term, a 5-year CD could be worthwhile. It’s entirely up to you.

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The typical American has $1,200 in their savings account, but that doesn’t mean they never make a savings-related mistake. Discover the most common. [[{“value”:”

According to a study by The Ascent, the typical American has $1,200 in their savings account. That may not be enough to pay their bills if they lose their jobs, but it is a good start on an emergency fund. Given how difficult it can be to build savings, it’s no surprise that people sometimes make mistakes. Here are some of the most common.

1. Not having an emergency fund

Having an emergency fund in place can save you hundreds, if not thousands, of dollars. Imagine that you break both an arm and a leg and can’t work for six weeks. If you don’t have enough saved to cover six weeks’ worth of expenses, you may end up using a credit card to get by or even borrowing from a predatory lender.

Let’s say you must cover $3,500 in bills over your period of unemployment. You use a credit card with an APR of 21%. Once you’re back to work, you begin making a monthly payment of $125 toward the card. If the amount you pay each month never increases, it will take you three years and three months to pay the card off in full. However, in that time, you will have paid more than $1,350 in interest.

Having money in an emergency fund isn’t about bragging rights. It’s about avoiding interest payments that deplete your checking account.

2. Not tracking spending

This one is easy to fall into. After all, who feels like writing down every cent they spend or taking time to balance their checkbook? When we fail to track our spending, though, it’s difficult to know where we stand. And when we don’t know where we stand financially, it’s nearly impossible to deposit money into savings regularly.

I suspect I know why I did not track spending when I was younger. I didn’t want to know when I’d spent enough. I was so busy trying to get by that I didn’t want to think about what I should be doing, like planning for retirement, paying down debt, or making sure we had enough money put away to carry us through an emergency.

Tracking spending provides a reality check, reminding us when we need to get back on track and encouraging us when we’re moving in the right direction.

3. Paying bank fees

Why pay for something when you don’t have to? Some banks (especially those with brick-and-mortar locations) charge savings account holders a monthly fee. The fee size can vary, but typically ranges from $5 to $8.

If you’re still paying a monthly maintenance fee on your savings account, it’s time to ask your bank to drop it. If it won’t, there are a lot of great financial institutions out there, and many won’t charge you a cent.

4. Treating savings like a checking account

This one can be tricky. You create a budget, track your spending, and get in the habit of putting money into savings each month. At some point, friends ask you and your partner to share the cost of renting a cabin near wine country. You know there’s not enough money in checking to cover the expense, so you pull it from savings.

There’s nothing intrinsically wrong with taking money out of your savings account, particularly when it’s to cover an emergency or something you’ve planned for. The problem arises when you use the account to fund the fun things you want to do but can’t afford to pay for.

5. Ignoring online banks

We humans are creatures of habit, and one of those habits (for many of us) is banking where we’ve always banked. Here’s the problem with that: It’s easy to overlook online banks. Online-only banks aren’t weighed down by a ton of overhead, so they can usually offer more competitive rates on deposit accounts, like savings.

What online banks have in common with brick-and-mortar banks and credit unions is FDIC or NCUA insurance. As long as your bank is an FDIC member or your credit union is an NCUA member, your deposits are insured for up to $250,000.

If your savings account is not as plump as you would like it to be, don’t be discouraged. Everyone begins somewhere, and if you can just put a few dollars away each month, start there. The trick is to be consistent with whatever amount you can add to the pot.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

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*Stock Advisor returns as of February 12, 2024

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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A few simple moves could help you save big at Costco. Read on to learn more. [[{“value”:”

Joining Costco could be a smart move for your personal finances. The savings you reap can easily exceed the amount you shell out for an annual membership. But if you really want to score the best deals at Costco, make these important moves.

1. Read through the coupon book

If you’re a Costco member, you should get a little booklet in the mail every month highlighting what’s on sale in the coming weeks. And if that pamphlet doesn’t arrive by mail, you can access it online. There, you’ll see which items are discounted, and what each discount entails.

Annoyingly, Costco doesn’t print each item’s original price in these booklets. And the reason is that it can’t, because prices vary from store to store, whereas the discounts on offer each month typically apply universally. But still, that way, you’ll at least know what’s on sale.

If there are non-perishable items you use regularly available at a discount, those are the ones it’s generally worth stocking up on during a sale period. Be careful with on-sale food purchases in the context of items you don’t eat regularly. All food has an eventual expiration date — even boxed items that sit on a shelf. You don’t want to buy crackers in bulk when they’re on sale only to have half of the package go stale on you.

2. Look for items ending in $0.97

Costco doesn’t have a clearance section like some stores do. But throughout the store, you may notice items ending in $0.97. Usually, this means that they’re marked down significantly.

What’s more, sometimes, you’ll see a date on the price tag sticker for a given item. If it’s recent, it means the markdown was recent. If it’s an item you don’t need urgently, you may want to wait a week to see if Costco lowers the price even more. That could happen if the item in question is a tough sell and Costco eventually decides it just wants to get rid of it.

3. Go to the gift card section

Buying gift cards at Costco is almost always a financially sound decision. Costco typically offers gift cards at a price below their face value.

As one example, right now, you can buy $100 worth of Domino’s gift cards for just $79.99 at Costco. If you order dinner from Domino’s often, a purchase like this is a no-brainer because you’re going to reap a lot of savings.

These are only some of the steps you can take to get great deals at Costco. The more you shop there, the more strategies you can develop that lead to the savings you’re after.

And if you’re fairly new to Costco, ask a seasoned member you know what tactics they utilize to save big. There are certain tricks you’re apt to pick up as you go along. But it never hurts to get the inside scoop from your friend or neighbor who’s been shopping at Costco every week for the past 10 years.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

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*Stock Advisor returns as of February 12, 2024

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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