Gen Z: Living Fast, Spending Faster! How to Avoid Financial Chaos & Build Your Emergency Fund 

YOLO - As they say! (You Only Live Once) | Live fast, die young | Life is short | You're only young once!  How many times have you made the worst financial decisions when you see a "supposedly" motivational post on Social Media?  Guilty over here!!!  

The problem with the majority of Generation Z is that either  Gen Z have either the confident mindset of a millionaire or they are living in their delulu (slang for delusional) world. Whilst many have regular jobs and family responsibilities with young children, others are Tik-Tok influencers in the making. 

Did you know that many Americans are not adequately prepared for unexpected expenses. A study by Empower found that 21% of Americans have no emergency savings at all, and 37% couldn't afford an unexpected expense over $400. 

Similarly, a LendingTree survey revealed that 49% of U.S. adults wouldn't be able to cover a $1,000 emergency using only cash or their checking and savings accounts. 

With the change in lifestyle and too many card debts and extreme spending on the rise, how does one become frugal and save wisely?

What is the general rule of thumb when it comes to saving a certain amount of money AKA the Emergency Fund.

The SRR (Savings Ratio Rule) is a general guideline that helps people determine how much of their income they should save. 

A standard approach is the 50/30/20 rule comprising of 3 segments which divides your after-tax income into three categories:

1. 50% for Needs: This includes essentials like rent, utilities, groceries, and transportation.

2. 30% for Wants: These are non-essential expenses, like shopping, dining out, entertainment, and hobbies.

3. 20% for Savings: This portion goes toward your savings and investments, including emergency funds, retirement accounts, and other long-term savings goals.

Another approach is the Savings Rate itself, which suggests saving a percentage of your income each year. A common target is saving at least 15% of your pre-tax income for retirement. The higher your savings rate, the faster you can build your financial security and reach your retirement goals.

The logic behind these rules is to create a balanced budget that allows you to live comfortably while also preparing for the future.

With the rise in lifestyle changes, increasing credit card debt, and extreme spending habits, it’s important to adopt a more frugal approach to managing money and saving wisely. One of the key strategies is to build an Emergency Fund, which acts as a financial cushion for unexpected expenses.

So, what’s the general rule of thumb when it comes to saving for an emergency fund? Experts recommend saving three to six months' worth of living expenses. This means setting aside enough money to cover your essential costs—like rent, utilities, food, and transportation—if you were to lose your job or face an unexpected financial setback.

Here’s how you can become more frugal and be a Savvy Saver!

1. Track your spending: Start by understanding where your money goes. Check your statements weekly, Cut back on unnecessary expenses and focus on needs over wants.

2. Create a budget: Set a weekly or a monthly budget that includes a percentage put aside to build your emergency fund and stick to it.

3. Automate savings: Open a separate 'Do Not Touch' savings account and set up automatic transfers to your savings account each month on Pay Day. This way you pay yourself first before spending on other things.

4. Cut back on high-interest debt: Refrain from using multiple credit cards and pay off high-interest credit card debt as quickly as possible.  Choose a Credit Card which gives perks like cashback, high reward points, low interest charges or transfer to 0% balance transfer lender.

5. Shop smart: Look for deals, for everyday items bought in bulk as it works out to be cheaper. Use coupons, and avoid overspending on non-essential items.

By being mindful of your spending and prioritizing saving, you can slowly but surely build a solid emergency fund over time and acquire more disciplined skills to manage your finances.

Be a Savvy Saver with a High-Yield Savings Accounts

Are you looking for easier access with a low-risk savings option without being worried by stock market fluctuations?
If yes, look no further!

One of the most popular accounts offered by many financial institutions.  With some accounts requiring  little as $100 to $1000 deposits whilst others none whatsoever -  this makes the High-Yield Savings account the most sought after and a pocket friendly option.

With the interest rate being a 3% to 5% APY, H-Y.S  accounts have no set tenure which also makes it ideal if opening an account for a minor as funds remain accessible and be kept for as long as you like.

Below is a comparison of some of the top high-yield savings account providers, highlighting their key features and benefits.

Marcus by Goldman Sachs provides a high-yield savings account with no fees and a solid interest rate. It's also easy to manage online.

Discover Bank is known for its online savings accounts with a high interest rate with zero monthly fees. Plus, you can access your account 24/7.

American Express National Bank provides a high-yield savings account with a good interest rate and no fees. You can manage it online or through their app.

Synchrony Bank Gives competitive rates and also provides an ATM card for easy access to your funds, which is a nice perk.

Capital One 360 being widely recognized for its no-fee savings account with a decent interest rate and easy access to your money.

CIT Bank currently offers high interest rates with a minimum deposit requirement, and they have a solid reputation for online banking.

Barclays being the most popular for offering a high-yield savings account with no minimum deposit and no monthly fees.

*Note: Interest rates and features mentioned above are subject to change at the discretion of each bank/financial institution. It’s always a good idea to check with the bank directly for the most up-to-date information.