Managing money can be a challenge, especially if you didn't learn much about it growing up. As a millennial, I've definitely made my share of money mistakes, and I really hope that Gen Z'ers can learn from these experiences and avoid falling into the same traps.
So we asked millennials in the BuzzFeed Community to share their best advice about debt and money for Gen Z, and they gave us soooo many great tips. Here's what they had to say:
1. "Get tips on filling out your FAFSA [Free Application for Federal Student Aid]! No one helped me, and I qualified for ZERO public assistance even though my parents were at the poverty line. Now, I'm stuck with these private loans that can't be forgiven or consolidated."
2. "I got a high-limit credit card at 18 to help build my credit. It didn't take long to run up debt, and not only did I not have a way to pay it back, but I also lacked experience managing debt. When my Gen Z little brother turned 18, I suggested he get a secured credit card instead."
"Basically you have to 'load' money on the card. For a $300 limit, he would have to load $300 to open the card. It builds credit slower, but if he had gotten into a situation where he couldn't cover the card balance, he already had paid the balance (minus a few fees I'm sure). He did this for a few years until he had built good habits, and upgraded to unsecured credit. He has a great score now, and has never dealt with collections, large monthly payments, etc."
3. "If you can, start a savings account as soon as possible for emergencies. Even $10–$15 a month can help when an unexpected expense pops up. This can help you avoid using credit cards for emergencies, or at least not put so much on the card."
4. "I wish I had taken a second to read the paperwork or made sure I understood what I was getting into when I got my student loans."
5. "Be mindful of who you trust to pay you back."
"I got a sob story from an ex. I felt bad and paid [their debt] with my emergency credit card. [The relationship] didn't work out, and now I am stuck paying it off. Just because it's available for you doesn't mean you should use it for others' debt."
6. "Try harder to get free money!!! There are so many scholarships and grants for so many things. Especially people of color, please put in time and effort for higher education because it’s there. Even for a trade school, if college isn’t your thing, try your best not to get too much debt too soon."
Psst, not sure where to look for scholarships and grants? Check out these 11 ways to find $freeeee money for school.
7. "I opened a credit card with a $7K limit in college for 'emergencies.' By the end of my four years, it was maxed out because 'emergencies' quickly started to mean 'pizza and beer.'"
8. "Don't transfer money from a credit card account to a regular spending account as a 'cash advance.' The bank will likely charge you a much higher interest rate than normal and maybe extra fees, and you can end up having way more to pay back than you expected."
9. "I 'borrowed' pretty much all of the money in my 401(k)/IRA when I wasn’t working and had to have surgery. Big mistake. Big penalty."
"My retirement savings are pretty much depleted. I only recently started making enough money to rebuild it. Now I’m worried about growing older."
Speaking of retirement, you don't have to wait until you get a job with a 401(k) to start saving. Here are some ways to save for retirement without employer assistance.
10. "Top banking tips: 1. Don't rely on your bank to balance your checkbook. Balance it yourself, and only use your online banking tool as a means to double check for errors. You never know what's pending and for how long, so you may think you have more money than you do."
11. "I teach at a community college, and I am AMAZED at how much cheaper the tuition is than at the state university I attended! I mean, it's not exactly the 'true college experience,' but earning an associate's in two years and then transferring for a bachelor's means saving a LOT of money for your gen eds!"
"Then you can focus on major-specific classes at the transfer institution, making that higher tuition more reasonable for the level of expertise you get in upper-level university classes. My college even has free tuition 'promise' programs for high school graduates in our service area who maintain a certain GPA, which saves you a few grand a year!"
"Community college does not mean you’re getting a lesser education. I had a professor who taught the same exact subject at a university give us the same exact work and test, and us community college people always earned the higher grades. But I tell people all the time, go to community college; do your basics."
12. "This is counterintuitive to the narrative, but there are ways to be able to afford to buy instead of rent. In some parts of the country (like DC), there are good first-time homeowner assistance programs — including grants to cover your down payment, which was the biggest hurdle for me."
"These don’t have to be paid until you sell the property (which appreciation of value should easily cover), and you’ll also earn helpful tax credits. If you do this when your income is lower, you’ll qualify for much more money and assistance than you will when you’re more 'established.' A mortgage is so much cheaper and more stable than rent, and you can use that property as an income source in the future. After buying my first place and learning all about this in my 30s, it’s my biggest regret to have not learned about all of these opportunities early on!"
—ag5
13. "Never ever sign a financial document if you do not feel you can explain the basic concept(s) of it out loud to another person. We all think we get it, but until you can give a quick rundown to another person you may be overestimating your understanding."
14. "If you start a business, have a tax accountant teach you what is expected out of you from the very beginning. I started a small side hustle that had unexpected, explosive growth the second year. I successfully did my own taxes the first year and used my basic knowledge to try and prepare myself for tax season the second year. Unfortunately, I miscalculated or misunderstood what I was doing and underprepared. I'm still paying back taxes on that one year five years later, and it could have easily been prevented had I been wise enough to seek help from the beginning."
15. "Aside from the obvious student loans, avoid car payments! I know having the newest or coolest car when you're 18 to 22 can be tempting and enticing, but that’s a purchase that immediately depreciates. Also, think of the trips you can take and memories you can make with this few hundred you saved over a few months!"
16. "Don't lend friends money — or at least don't lend it expecting to get it back! And generally don't sign a lease with friends either. You might think you know them, but there may be a side of them they haven't shown you yet. It's a great way to breed tension and get yourself into a sticky financial situation, even if you're being responsible with payments yourself."
17. "Pay off or pay more than the minimum on your credit card every month — if you don’t, those interest rates really wreak havoc on what you owe. Use a debt calculator to see how much you’ll end up paying if you only pay the minimum — it’s shocking how much of your money goes toward interest and not what you originally purchased."
18. "I wish someone would have taught me about credit scores, how to check them, what to do when you're identity has been stolen, how to make a claim of fraud to each credit reporting agency, etc. It wasn't taught in school, my parents didn't teach me, and I was really left in the dark on all of this."
"I had to learn the hard way when I found out my identity was stolen. Side note: Don't assume a family member could never do this to you; it does happen, and it truly sucks.
Good news is that with time, patience, and hard work you can turn your credit score from an anxious nightmare (400s) to something you no longer cry about (730+)."
BTW, if you're interested in working on your credit score, we have tips for boosting a lower score and things you need to know if you don't have a credit score yet.
19. "I thought my first credit card had a $900 limit. Turns out, it was a $3,000 limit. I ran it up in just three months (I had just moved into my first apartment and needed furniture)."
20. "Credit cards aren't evil. For one thing, having one helps you get good credit, which is important for a lot of things. Secondly, heaven forbid something happens like your car breaks down miles from home, or you lose your home to a fire and you need clothes, or you simply don't have money for gas to get home — a credit card can save your ass."
"When I was in college making shit for money, I ran into a problem where I was $3 short to cover the gas (it was a pump first pay after). I was basically treated like a criminal trying to rob them at gun point. Had to give them my $300 class ring as collateral so I could go get the money from a friend. It would have saved me a whole lot of trouble if I had a credit card then. I got one very shortly after."
21. "Don’t wait until after your six-month grace period from graduation to start paying on student loans. The interest accrued in those six months will literally destroy you, and it won’t stop."
22. "Don't marry or settle down with someone who is hugely irresponsible with money."
23. "Store credit cards may have higher interest rates but can be useful if you shop there often and pay it off in full every month. Some stores also offer special discounts only with their card or give rewards. As long as you’re responsible, that line of credit can increase your total amount of available credit and decrease your utilization rate, which can improve your credit score."
24. "Don't assume you're fixing your credit by not using it. I made mistakes with a card at 18. I thought I was doing the right thing by not using a credit card and paying for purchases outright. Come to find out that was a huge mistake. You can't improve your credit if you don't use it."
25. And, "Don't write off trade schools as an inferior career/higher education path."
Note: Submissions have been edited for length and clarity.
Anything else Gen Z'ers need to know about money? Share your tips in the comments.
And for more stories about life and money, check out the rest of our personal finance posts.