New Year, New Goals: Financial Resolutions for Gen Z and Millennials

As we usher in a new year, it's the perfect time to take control of your financial futures. The unique challenges and opportunities of the modern era demand a fresh approach to money management.

One study finds that Gen Z and Millennials are more likely to declare financial resolutions and plan to achieve them by saving more, paying off debts, and spending less. Continue reading to discover ways to optimize your financial objectives and stay committed to your 2025 financial resolutions.

The cornerstone of financial success is a well-crafted budget. Start by tracking your income and expenses, understanding your spending habits, and identifying areas where you can cut back. Utilize budgeting apps or spreadsheets to make the process more intuitive and manageable. A clear budget will help you allocate funds for essentials, savings, and discretionary spending.

Life is unpredictable, and having a financial safety net can make all the difference during unexpected circumstances. Aim to save three to six months' worth of living expenses in an easily accessible account. This emergency fund will provide a buffer in case of job loss, medical emergencies, or other unforeseen events, allowing you to navigate challenges without compromising your financial stability.

Define short-term and long-term financial goals that align with your aspirations. Whether it's saving for a down payment on a home, starting a business, or funding your travels, having clear goals will give your financial journey purpose and direction. Break these goals into manageable steps, and celebrate your achievements along the way.

For those in their younger years with ample time to reach their financial goals, initiating the allocation of savings towards tax-advantaged investments or accounts may be a great idea. This strategy enables the compounding of interest and facilitates tax-deferred growth. Notable tax-advantaged vehicles include retirement accounts such as a 401(k), an IRA or Roth IRA, and a 529 plan.

Diversification can help you manage risk. You can diversify within asset classes like stocks, bonds, and real-estate. For longer term investments over 20 years, you may want to focus on allocating mutual funds and stocks, and for shorter term investments between 2-5 years, choose bonds or other fixed rate instruments. Investing in your retirement plan with regular periodic contributions also helps reduce risk and grow your savings over time.

The process of consolidating your debt into a singular monthly bill may include establishing a new loan or a balance transfer credit card to streamline your finances. This method may allow you to acquire a lower interest rate, pay off debt sooner, and increase your credit score. However this is not a guaranteed solution and you should only consider this option if you have a credit score high enough to qualify for a lower interest rate, if your cash flow will cover debt payments, and if your monthly debt payments are not more that 50% of your monthly gross income.

By taking control of their finances, building good habits, and staying informed, young adults can navigate the financial frontier with confidence and resilience. Remember, small changes today can lead to significant financial differences tomorrow.

Contact an Oppenheimer Financial Professional here to learn more ways to save for your future.