Mastering your finances: Financial lessons for Gen Z and Millennial Moms

India has the highest number of individuals belonging to the Gen Z and Millennial generations. Gen Z consists of those born from the late 1990s to mid-2010s, who are now part of the working population. Meanwhile, millennials, who were born between 1981 and 1996, are at the age where they are getting married and starting families.

In contrast to earlier generations, both Gen Z and Millennials have different priorities and spending habits. When it comes to work, Gen Z values flexible work arrangements and meaningful experiences while also pursuing personal interests like trendy travel, cuisine, entertainment, and fitness. Meanwhile millennials, especially mothers, are juggling between work, child care, and personal life. Unlike previous generations, modern-day mothers have taken on more responsibilities, resulting in unique spending patterns on child education and care, home care services, fitness, entertainment, and travel.

Both Gen Z and millennials share the common goal of building a fulfilling life, but certain financial mistakes are hindering their progress. These include overspending, lack of savings, and financial ignorance, which act as obstacles to achieving their financial goals.

Therefore, the following are some easy financial lessons that can benefit Gen Z and Millennial Moms.

Also read: Financial lessons to learn from your mother

Budgeting and saving

Building a saving habit is crucial for Gen Z and millennials to achieve financial stability. One can simply start by setting a budget and tracking the expenses. There are multiple percentage rules that individuals can follow to build saving habits without sacrificing their personal needs. Following are some examples.

Savings rules:

50-20-30 rule: Allocate 50 percent to needs, 20 percent to savings/debt repayment, and 30 percent to wants.

20-20-60 rule: Allocate 20 percent to saving, 20 percent to investing, and 60 percent to expenses.

Pay yourself first: Prioritise saving by setting aside a fixed percentage before paying the bills.

The 1% rule: Increase savings by 1 percent each year to reach at least a 15-percent savings rate.

3-6-month rule: Build an emergency fund to cover three to six months of living expenses for unexpected events.

Whichever rule suits you, pick that one and start saving. Instead of the old-world rule of whatever is left after spending is saving, you should embrace the new thought of saving a certain portion of your income and then spending the rest.

You can invest if and only if you have savings.

Also read: Money lessons woman finance leaders and their moms learnt from each other

Long-term investments

Choosing investment avenues that match one's financial objectives and risk tolerance is another way of ensuring financial security in the long run. A diversified portfolio that includes investments like equity and mutual funds (MFs) can help us develop robust financial security. However, it is important to have a long-term perspective and refrain from making rash decisions based on short-term market variations.

Say no to debt

High-interest loans, credit card debt, and other forms of debt can be difficult to repay and may accumulate over time, leading to financial stress and limited options. It is important to prioritise paying off debt and avoid new debt whenever possible to achieve long-term financial stability.

Also read: Caught between kids and parents, Gen S mums have six financial lessons to learn

Investing in education

Continuously learning new skills and upgrading education can increase earning potential that can result in better financial stability and opportunities for long-term growth. Investing in oneself can also mean taking up hobbies and passions that can eventually turn into a profitable venture. By focusing on personal and professional development, Gen Z and millennials can build a strong financial foundation for themselves.

Retirement plans

It's essential to invest in retirement savings to avoid financial hardships during old age. Individuals can invest in retirement plans offered by various financial institutions, such as National Pension System (NPS), Employees’ Provident Fund (EPF), and Public Provident Fund (PPF). It is also advisable to start early and seek professional financial advice to regularly review and adjust the retirement plan as needed.

Seek professional advice

Consulting with financial experts can be advantageous in navigating the intricacies of the economic landscape and making knowledgeable choices. Professional financial advisors can also better help develop a customised financial plan that aligns with one's personal objectives and risk tolerance.

In conclusion, while Gen Z and millennials, especially mothers, have so much to give, they indeed face distinct financial challenges. However, by keeping these financial lessons in mind, they can take better charge of their finances and work towards accomplishing their long-term financial aspirations.