I’m a Financial Planner: 8 Top Questions I Get from Gen Z (and Why Everyone Should Ask the Same)

Gen Z (born between 1997 and 2012) is known to be a hustle generation. They’re open to working side hustles and are generally smart with money, often being strategic about how they spend and save in order to be financially secure now and in the future. But you can only build so much wealth on your own at such a young age.

Additionally, data shows that Gen Z makes less money than millennials made a decade ago at the same age. According to a recent study by TransUnion in late 2023, Gen Zers aged 22 to 24 were making an average of $45,493. Adjusted for inflation, millennials were making $51,825 at that age.

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Part of being wise with your money, and making it stretch the furthest, is to ask questions of a trusted professional. Which questions? GOBankingRates spoke with financial planners to find out the top eight questions Gen Zers ask and how they may be answered.

These are all great questions no matter your age and wealth status, so listen up and ask away .

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‘How Should I Start Investing With Only a Small Amount of Money?’

We all need to be investing as early and as consistently as possible. Often, Gen Zers approach Shawn Carpenter, CEO and chairman at Stock Alarm , with the question: “How should I start investing with only a small amount of money?”

“This is a legitimate concern,” Carpenter said, but quickly added that there’s good news here, because you don’t need thousands of dollars to get started investing.

“Seriously, even a few dollars can start your investment journey,” Carpenter said. “The trick is to stick with it, because you’ll make more money over time with compound interest.

“This way, the more you add, even if it’s small, the bigger your capital. In addition, starting small allows you to learn without much trouble.”

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‘What’s The Best Way To Manage Student Loans and Debt?’

Gen Z, like many millennials, Gen Xers and even some boomers, are likely to be saddled with student loan debt, and possibly other debt, like that associated with credit cards.

Gen Zers want to know the best ways to manage these debts.

“This is the elephant in the room for most young adults, especially with the weight of student loans,” Carpenter said. “Managing your debt starts with knowing exactly what you’re dealing with; for example, what your interest rate is, when you’ll pay it off, and options to make it easier for you, such as refinancing or consolidating.

“Financial advisors often say that if you have high-interest debt, it should probably be your top priority. And hey, don’t forget to check out programs that can forgive part of your debt, especially if you’re doing public service.”

‘Should I Prioritize Saving or Paying Off Debt?’

This is a “classic” question, Carpenter said, and one the answer is not one-size-fits-all.

“This is a difficult situation and depends a lot on your personal side,” Carpenter said. “For example, if the interest on your debt is more than the money you get from savings or investments, then focusing on paying off your debt is the best way to go. But if not, you might be better off doing a bit of both.”

‘How Can I Build a Good Credit Score?’

We all know that having and maintaining a good (or, better yet, excellent) credit score is crucial. But the journey to a high credit score can be confusing, and Carpenter is often asked by Gen Zers how that can pull it off.

“Credit scores influence everything from getting a loan to renting a place and sometimes creating a job,” Carpenter said. “Consultants always recommend starting early with something as simple as a credit card, but use it sparingly. Pay regularly and keep an eye on your account to see what’s helping or hurting.”

‘What Should I Know About Taxes and Investments?’

Nobody likes taxes, and it’s not just because they’re financially, well, taxing, but also because they’re confusing — particularly when it comes to investment planning.

“Taxes can be a real headache, but getting it right can save you money,” Carpenter said. “It’s about understanding how different investments affect your taxes, such as knowing the benefits of long-term investments versus short-term investments, or using accounts that benefit you.

“Financial experts always say that you should consult a tax advisor to get this section fully settled and more money in your pocket.”

‘When Should I Start Saving for Retirement?’

Gen Z wants to know when they should start saving for retirement. The answer is simple, but not necessarily easy to follow.

“The sooner you can start saving for retirement, the better off you’ll be in the long run,” said Kristen A. Kuzma, CFP, wealth manager at Fairway Wealth Management LLC . “Not only will a longer time horizon allow you to save more money over time, but you will accumulate more growth on your investments from compounding returns.

“Additionally, it can be much easier to stick with a retirement savings plan throughout your working years if you begin that habit early.”

‘Should I Avoid Credit Cards?”

Many financial experts, including the great Warren Buffett, eschew credit cards, blasting them for the ghastly debt they can create. Gen Z wonders: “Should credit cards be avoided?” Not exactly.

“While credit card debt can pile up quickly if not managed appropriately, I think credit cards can be a useful tool in building a strong credit score if used correctly,” Kuzma said.

She continued, “If you pay your credit card bill off in full by the due date each month, not only will you avoid paying any interest or fees on your purchases, but you will demonstrate to the credit bureaus that you are responsible in paying off your debt, which is an important factor that goes into determining your credit score.”

‘How Much Money Should I Have in Savings?’

It’s a question on the minds of many, including younger folks: “How much money should I have in savings?’

“The answer to this question depends on specifics,” said Mark Henry, founder and CEO at Alloy Wealth Management . “If you’re asking about a regular savings account, the answer is roughly 3 to 6 months of expenses. That number will look different for everyone spending on lifestyle and needs, but you should aim to save up at least that much for emergencies like car trouble or job loss.”

As for retirement savings needed, there’s no magic number — but it’s best to go big here and save as much as you can.

“How much you need to save for the future will depend on what you want out of retirement,” Henry said. “Young Gen Z-ers likely don’t know exactly what they’re looking for in retirement yet, but it’s never too early to start contributing to retirement accounts.

“When you’re just starting out saving for retirement, if you max out contributions as much as possible, you’ll be on your way to financial wellness.”

This article originally appeared on GOBankingRates.com : I’m a Financial Planner: 8 Top Questions I Get from Gen Z (and Why Everyone Should Ask the Same)