Young Americans are wasting money on stupid things – like TikTok ‘pink sauce’ and Candy Crush. 3 Key Lessons They Should Steal From Baby Boomers
From lives in Candy Crush to TikTok “pink sauce” – the controversial condiment made from dragon fruit and sunflower seed oil – Gen Z are easily led to spend money on frivolous finds they see online.
Don’t miss out
A recent study by financial company Bread Financial revealed that 28% of Gen Z have made purchases in a video game, such as Sims add-ons or extra lives in Candy Crush, that they don’t want others to know about.
And 22% are embarrassed that they bought trending TikTok products like Amazon’s viral “butt-lifting” leggings, pink sauce or ring lights.
But what is most alarming is that this younger generation seems to have a spending problem in general. About a third of Gen Z spend more money than they earn, while nearly the same amount don’t budget at all, compared to 25% of overall respondents, according to the Bread Financial study.
Baby boomers, on the other hand, are most likely to budget and far less likely to fall prey to funky fads—here are some lessons their younger counterparts can take from them.
Be more conscious when it comes to spending
It’s important for young Americans to be more conscious and thoughtful when it comes to their day-to-day spending, said Nick Antonelli, senior vice president and chief marketing officer at Bread Financial.
He explains that these small online purchases may seem insignificant, but people often don’t realize how often they make them – or how they can add up over time.
Meanwhile, according to the Bread Financial study, boomers are less likely to make impulse purchases and more likely to plan their spending.
Antonelli says planning is the first step toward making healthier financial decisions. He recommends building a budget to keep track of all your purchases and plan for larger expenses.
Pay off debt
Credit Karma recently analyzed credit card usage by generation. And while Gen Z may have the least debt, they’re also racking it up faster than any other generation — increasing their average balance by 3% between May and December 2022, according to Credit Karma’s report. Meanwhile, over the same period, boomers avoided significantly increasing their debt, with the smallest percentage increase of all generations at 1.11%.
That said, regardless of age, managing credit card debt is a top priority. Once you clear your credit card balance, you won’t have to worry about racking up high interest on your monthly bills anymore, and you can free up space to save or spend on things you need.
And it has an effect on your entire financial picture: Having a lower debt-to-income ratio also boosts your credit score – meaning you’ll appear more reliable to a potential lender when applying for more credit or loans, such as a mortgage.
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Depending on your situation, there are a number of ways to tackle your debt. You can start with the highest interest debt first and work your way down or do the opposite by getting smaller debt out of the way first.
Another option if you’re having trouble keeping track of your various lines of credit is to roll all your balances into a lower-interest consolidation loan.
If you are feeling overwhelmed, it may be helpful to consult with a qualified professional advisor to help you on the fastest path to financial freedom.
Start planning for the long term
Many boomers may already be well into their golden years – but how did they get there? By preparing. So if Gen Z wants to retire comfortably one day, they should start building their wealth now.
If you’re not sure where to start, do your research, set up a brokerage account or try an investment app and develop a well-balanced, diversified portfolio.
Even if you don’t have thousands of dollars to dump into an investment account, you can start small with just a few dollars. The sooner you start, the sooner you’ll be able to see the magic of compound interest increase your balance over time.
Alternatively, if you might need that money at some point, another option is to stash some of your paycheck in a high-yield savings account to earn interest, or a certificate of deposit (CD).
A high interest savings account can have an interest rate of 4% (compared to a traditional savings account, which is usually only 0.30%). And some CDs are currently paying even higher dividends.
Antonelli recommends starting by opening an account and planning in small increments based on your personal cash flow and financial situation. Automatic deposits are another great way to stay on track – you can always adjust the amount as your income or priorities change.
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This article provides information only and should not be construed as advice. It is supplied without warranty of any kind.