Gen Z: 'The money will come back.' But will It?

Our current crop of 20-somethings – the majority of whom are Generation Z – have apparently caught on to the time-honored tradition of “living it up” while young and not worrying about money.

A social-media trend that’s recently taken over TikTok features people sharing video or photos from travelling abroad with the overlaying text: “I’ll make my money back, but I’ll never …” 

The blank at the end goes something like “… be 20 and swimming on a secluded beach in Albania again.”

This sentiment seems to creep up on every generation. (In 2015, it took the form of a viral article, “If you have savings in your 20s, you’re doing something wrong.”) The problem is, it’s misguided.

Yes, you have choices

It is a myth that you have only two choices about money in your 20s – that you’re either completely locked down, frugal and saving for your future, or you’re YOLO-ing your way through life, racking up priceless experiences (and probably debt) and planning to become more financially prudent later on.

In reality, you can save for your future and be swimming in the waters of Albania or eating pie on a train through the Swiss Alps. 

(Or, depending on your particular financial situation, your “YOLO-ing” may be more cost-effective.) 

You just have to think strategically about your money and your ambitions – that is, set goals and stick to a budget that will allow you to meet them.

Taking stock of your cash flow and creating a spending plan can help you avoid volatile financial swings between always splurging or always saving. Instead, you can set yourself up for a life of stability and choice.

One important truth of the TikTok trend is, “I’ll make the money back.” 

It’s true that many people will see pay rises and promotions over the course of their careers. But it’s also worth remembering that life doesn’t tend to get less expensive as you age. 

Your expenses will grow

Your expenses usually grow, too – your future self might want to buy a home, rescue a few dogs, have a wedding, take lavish trips, buy nicer clothes and food, have a child or two, maybe take a sabbatical from work. And it becomes more likely that you’ll experience a health crisis or need to financially support a loved one. 

Overspending early in life can set a precedent that you won’t necessarily be able to maintain without financially harming yourself in the future.

Take one example: having children. 

A favourite line from one of my husband’s coworkers, who is married, child-free and in his 50s, is: If you don’t have kids, your 30s are your 20s, but with money. 

Expanding a family is a huge expense, especially in the US, which has seen an increase in the maternal mortality rate, offers no mandated paid leave after childbirth and offers heinously expensive childcare options for working parents.  

This doesn’t mean that you shouldn’t be living it up in your 20s. 

You can still go on adventures and live a full life while working to build a strong financial base. That just might mean making day-to-day financial choices that allow you to set money aside for your future goals or opting for a cost-effective version of your dream today, instead of the all-out luxury one that will strain your savings.

Be intentional

The key is to be intentional. If you want the freedom to take a two-week vacation to the No.1 destination on your bucket list, put money aside for it. 

That should be part of your spending plan (also known as a budget). 

If you’re able to, set money aside each month for a trip on top of also putting money towards repaying any debt, building an emergency savings fund and investing in a retirement plan.

Here's how this works in practice:

Start with a list of your necessary monthly costs (rent, utilities, transportation, groceries, dog food, student loan payments, and so on.). Write down your monthly net income and subtract your monthly costs.

 You should be contributing to your retirement plan before money hits your cheque account, so it checks one item off the to-do list already. In an ideal situation, your income is more than your necessary expenses.

Assuming a surplus, you can decide exactly where you want to direct that money each month after hitting your baseline needs. This can include saving up for your next adventure and a line item in your budget for dinners out or seeing shows. 

It can include whatever you want it to – but the point is to stay within your means.

Will you be able to do absolutely everything or buy whatever you want all the time? No. But keeping track can help you set priorities and make sacrifices that you won’t regret later.

Such planning allowed me to travel internationally in my 20s while also saving and investing and helping my husband pay off student loans. 

It also helped that I had side-hustles the entire time and directed that income toward my “fun goals”. 

There’s no need to delay “the money will come back”.

It’s easy to fixate on the binary of frugality versus. living it up. But it’s far more rewarding to discern what you actually find important. 

We are constantly bombarded with messaging about what we should value and strive for, but much of it is marketing and social pressure. 

(Does swimming on a secluded beach in Albania even sound appealing to you? Maybe travel isn’t your thing and you’d rather put more money towards a hobby.) 

Focusing on your values will illuminate how you should be spending, saving and investing your money. Say no to what you don’t want, and budget in what’s important.

The future isn’t promised, so yes, please create some memories and live life as you go. But financially hedge your bets, just in case you do live to a ripe old age.

©2022 Bloomberg L.P.

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