How to Manage Money Better: A Simple Guide to Budgeting

September 8, 2023 |
Article | 3 min
| Personal Insights

Take a look at these tips to effective money management with our straightforward budgeting guide, designed specifically for Gen Z. These essential tips can help set financial goals, make smart spending choices, and take charge of your financial future.

When you’re just starting out, determining the best way to plan for your financial future can be difficult. You’re busy securing short-term goals—but learning how to manage money better now will help you develop habits that will maximize your wealth over time.

Gen Z’s determination to overcome significant economic hurdles is evident in the rise of trends like cash stuffing on social media. However, there are so many additional tips and tools out there you can leverage to achieve financial freedom. Let’s explore all the essential insights and strategies Zoomers need to optimize their savings potential and set themselves up for future wealth.

Money Management 101: Exploring Basics for Students

You want to have new experiences like traveling, trying new restaurants, and going to shows or events—but at the same time, you must ensure that you enjoy these activities in a financially responsible way. Your lifestyle shouldn’t hobble your long-term savings goals.

Woman with look of excitement while reviewing finances

Right now, time is on your side when it comes to saving. Retirement is a long way off when you’re just starting your career—but to accrue the most interest on your savings, you must contribute a manageable percentage of your paycheck to a dedicated fund now.

Allocating funds in your budget for medical or educational expenses first for your long-term savings goals can help you secure financial well-being. Then, you can dedicate a predetermined portion of your income to experiential spending without jeopardizing your future financial wellness.

Strategies for Effective Cash Flow Planning: Tips for Gen Z Students Detailing How to Manage Money Better

Personal cash flow planning is a great way to manage money better. How you spend should follow a predetermined budget. You want to portion out your income to cover essential expenses, monthly savings goals, and potential debts.

Optimizing your cash flow is the process of calculating how much money you earn versus how much you spend. Then, you can divide your income into portions to cover your distinct expenses, spending habits, or savings funds. This builds a budget that accounts for every part of your financial needs.

Bucketing—segmenting your income into distinct accounts used for specific purposes—is one way to create a structure for your budget. But there are other techniques to consider as well! Let’s go through some other popular money management strategies for Gen Z.

Smart Budgeting Techniques: 50/30/20 Rule

A good budget guideline has to account for one’s unique needs. Ideally, you should be able to tailor a budget plan to your individual debts, income levels, and expenses. One popular method is the 50/30/20 rule.

Woman smiling while using online banking

The structure is relatively easy to understand. It portions out 50% of your income for essential needs such as housing, loans, and groceries; 30% of your income to discretionary spending, which covers non-essential purchases like dining or traveling; and the final 20% directly to savings accounts like your retirement or emergency fund. It’s a simple and easy strategy to manage money better.

Cash Stuffing: A Strategy for Maximizing Savings

If you struggle to maintain a budget or leave your savings accounts untouched, wealth advisors often advise that you try cash stuffing. It entails taking your money out in cash and portioning it out into several labeled envelopes such as wants, needs, and savings. Then, you spend the cash directly out of these envelopes. This gives you a tactile sense of your depleting budget and can help you avoid dipping into other funds.

Credit Cards: Informed Finances for Gen Z

There’s a common misconception that to manage money better you need to avoid credit cards. While you do want to avoid accruing high-interest credit card debt that can quickly spiral out of control, the reality is that you need to build up a credit score. Having a credit history is necessary to obtain a personal loan, mortgage, or car payment.

Buy now, pay later retail options can help build up a credit history, though ideally, you want to establish a consistent and reliable monthly balance repayment on a card to build your score. However, make sure to keep your credit debit within your means of repayment.

Automatic Payment Plans: Streamlining Finances

You can take potential inconsistencies out of your savings plan by setting up automatic transfers with your local bank. A portion of your direct deposited paycheck can be instantly transferred into your savings account without you having to take any action. This can help you enforce discipline in your spending habits.

Ideally, if you choose to follow the 50/30/20 rule, you can automatically save 20% of your paycheck every month—but you can adjust the percentage to meet your cash flow demands as needed. Over time this technique promotes consistency, which can help you pay down debts and save faster.

How to Manage Money Better With Bank Collaborations

The importance of financial literacy isn’t lost on Gen Z. Zoomer trends often focus on savings and investment ideas that promote long-term monetary well-being—but one of the most foundational aspects of establishing your financial future is establishing an ongoing relationship with your bank.

If you’re working with the right bank, they’ll provide access to advanced digital budgeting and savings tools that make it easy to handle your finances from your phone.

Asking a Financial Partner How to Manage Your Money Better

On top of the digital tools your bank can provide, a partner like First Bank & Trust, a division of HTLF Bank allows you to develop a relationship with an experienced and trustworthy banker that can give you personalized help and educational materials.

The value of having an expert on your side can’t precisely be quantified. However, it’s hard to overstate the merits of teaming up with an expert early on in your financial journey. They can help you discover the best ways to manage money better for your unique financial situation.

If you’re interested in getting started on a better budgeting plan with First Bank & Trust, a division of HTLF Bank, reach out today.

This material has been prepared for informational purposes only, and is not intended to provide and should not be relied on for investment, legal or tax advice. Products offered through Wealth Management are not FDIC Insured, are not bank guaranteed and may lose value.