There’s no denying that baby boomers have more life experiences than Gen Z. But this doesn’t mean boomers have nothing to learn from the younger generation. By understanding the money decisions of Gen Z, baby boomers may be able to improve their financial wellbeing.
Here are four money lessons boomers can learn from Gen Z.
1. Diversify your income
77% of Gen Z earns money through the gig economy or part-time work. Some of them even have a full-time job and earn money on the side. Diversifying income helps you to meet financial goals faster and protects you in the event of a job loss.
“Just like Gen Z, boomers should create multiple streams of income. It’s important that they understand the importance of side hustles in retirement. They can easily make a quick buck doing things they enjoy,” said Chris Russell, certified financial planner at Tempus Pecunia.
If boomers work a part-time job or start a side hustle, they may be able to stretch out their retirement savings. Even if you have sizable retirement savings, an extra source of income may allow you to travel more or indulge in additional luxuries — or even have an added nest egg for emergencies.
2. Continue to invest in yourself
Gen Z may be looking for ways to learn and grow in their careers. They often take additional courses to further their knowledge and make themselves more marketable, said Russel. They may also attend conferences and trade shows to network with others and look for future career opportunities.
Gen Z’s desire to learn often pays off, as it leads to better job prospects and greater earning potential. Even though many boomers are toward the end of their careers or in retirement, they should continue to learn and grow.
Russell said that one of his boomer clients recently completed a copywriting certification through a local university and used it to create a freelancing career on the side. Little steps to make yourself more marketable to employers can help you financially in the long run.
3. Invest with caution
Gen Z takes a much more cautious approach to investing. They like to pay down debt, especially student loans, before they invest. This is likely because Gen Z have seen their parents struggle during economic downturns. They know paying off their debt leads to less stress, lower risk and greater security during a recession or depression.
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“Since Gen Z has gone through some major recessions, they tend to be more cautious,” said Amit Chopra, certified financial planner at Forefront Wealth Planning and Asset Management.
While baby boomers should continue to invest, it’s wise for them to do so with caution, just like Gen Z. If they have debt, paying it off to reduce their monthly expenses and alleviate some stress during their retirement years is a smart move.
4. Be adaptable to change
Gen Z embraces the rapidly evolving financial environment better than baby boomers.
“Since they were born into a technologically advanced age, Gen Z likes the idea of investing through robo-advisers and crypto currencies,” said Jose Cuevas, certified financial planner at Wisdom Investments.
Baby boomers may be more hesitant to follow the latest investment trends. However, they may be able to grow their nest egg at a faster rate through adoption. Robo-advisers, for example, can make it easier and less expensive for boomers to manage their retirement funds. Robo-advisers are essentially digital platforms that offer automated financial planning service with minimal to no human supervision.
Boomers who aren’t afraid to try robo-advisors and other financial tools that may not be familiar to them are likely to improve their financial health.
Image: Giogio Travato