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    Home»Retirement planning»How Gen Z should prepare their finances for 2023
    Retirement planning

    How Gen Z should prepare their finances for 2023

    December 20, 20223 Mins Read
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    For Gen Z, the thought of saving, investing and planning for retirement is daunting.

    As young workers begin their careers, stock and bond markets are in turmoil, with the S&P 500 heading for its worst annual performance since 2008. A recession looms. Wages have not kept pace with inflation. Credit card debt and interest rates are rising. Housing prices have skyrocketed. And a huge retirement savings deficit has worsened.

    For Gen Z, the start of the new year is a good time to take a financial checkup, advisers say. They recommend sketching out a roadmap that balances immediate financial goals, while keeping an eye on saving for retirement, even decades away.

    Here are five things experts say young people should do to get their finances in order for 2023.


    Personal review
    People rarely look at all of their income, investments and expenses in one place these days, said Dustin Smith, financial adviser at Wealth Enhancement Group. Before you can make financial decisions, he said, you need to have a thorough and holistic understanding of where you stand. This involves carefully compiling all of your transactions and paying close attention to things like interest rates and recurring subscriptions.

    People should also consider any major anticipated expenses, such as moving or vacations, and develop short-term savings plans accordingly, said Bill McManus, vice president and general manager of applied insights at Hartford. funds.


    emergency savings
    The rule of thumb when it comes to saving is to have three to six months of expenses set aside for emergencies, especially if you’re worried about job stability during an economic downturn.

    “If you’re employed, make sure your financial health is in order, like having a cash reserve before paying off debt,” said TJ Williams, financial planner at Wealth Enhancement Group. While it may seem counterintuitive to save before repaying loans, failing to do so could push you deeper into debt or force you to sell investments that could help you in the long run, he said. added.

    To make the most of any extra money and protect that money from inflation, he recommends shopping around with various banking products like high-yield savings accounts and money market funds that offer record yields. But keep in mind that some accounts may have penalties or withdrawal limits when deciding where to park your assets, Williams said.


    Plan your retirement
    Many companies automatically enroll their employees in a 401(k) retirement savings plan — or, for nonprofits, a 403(b) plan — and young people should try to take full advantage of any consideration. available, said Maria Bruno, head of U.S. wealth planning research at Vanguard.

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