Preparing Your Gen Z Teens for Big Life Milestones and Expenses

As Generation Z teens approach adulthood, they will face a series of significant milestones that can be more successfully navigated with careful budgeting and expense planning. From pursuing higher education to saving for a car, or even managing the transition to living on their own, these financial milestones can all be a little daunting.

Here we’ll discuss how you as a parent can help your teen more easily manage these big expenses in life and anything else that might come their way financially.  We’ll offer practical advice and mindful strategies to help you succeed it instructing your child and setting them on the right path.

The Economic Challenges Gen Z Might Face

We’ve all been feeling the effects of rising inflation for the past couple of years, but it’s important as a parent to understand how this could continue to affect your child as they enter adulthood.

Gen Zers are currently between the ages of 11 and 26, so some of them are already experiencing the challenges of adulthood due to rising costs. However, that doesn’t necessarily mean that younger Gen Zers are destined for debt as well, but they might if they aren’t adequately prepared.

Interest rates are currently at a 15-year high, and while inflation rates have stabilized, they are 3 percent higher than they were before the pandemic. This means just about everything is more expensive these days and it’s also making it more difficult for people to get approved for credit.

Currently, most adult Gen Zers say that one of the biggest barriers holding them back is the higher cost of living. With so much of their income being sunk into housing expenses, they can’t save up and meet their financial goals.

There is no way to know for certain how rates could change in the coming years, but it is unlikely that there will be any sort of significant drop. This means if you want your teens to be prepared, it’s important to start teaching them how to be wise with their money now so they can be more likely to succeed in their financial endeavors.

How to Help Your Gen Z Teen Avoid Debt and Better Prepare For Life’s Big Milestones

Any parent should want to teach their child how to stay safe with money, but this is even more vital for parents who have teenagers right now who will soon be entering adulthood. Unfortunately, not many schools teach kids about budgeting and healthy spending habits, even though so many young adults in the past decade have struggled with debt.

As such, it is on you as the parent to teach your kid the life skills they will need so they are not so heavily burdened when they enter an economy that is difficult to navigate without a stable financial situation. If you aren’t sure where to start, the tips below can help as you start having these conversations with your teen about money and financial planning.

1. Help Them Learn to Budget

Learning how to budget is the first step to developing a healthier relationship with money. Only some people budget because they think they can easily keep track of everything in their heads. However, teaching your teen how to make a physical budget and lay out all of their potential expenses can help them get a better understanding of why it’s important to plan and save.

Having a physical budget that they can see keeps them more aware of all the expenses in their life and why, even though their bank account seems full, it is perhaps not wise to spend their money on some fancy new item they don’t need. It teaches them how to track their spending and why even though they might have available funds now, those funds might eventually be needed to pay for certain bills or big milestone purchases.

2. Talk to Them About the Importance of an Emergency Fund

It can be more challenging for teens to understand the importance of saving for emergencies when they haven’t needed to be aware of the cost of such things since you’ve taken care of that for them. Unfortunately, emergency costs often contribute to young adults finding themselves in debt, such as suddenly needing to pay for a costly car repair or emergency medical expenses.

These are things they likely didn’t think about as a teen. Even once they enter adulthood, it is hard to rationalize saving for emergencies when they haven’t yet experienced the fear and stress that comes with being in an emergency without enough money. That’s why it’s your job as their parent to help them understand what emergency funds are and why they are important.

3. Help Them Avoid Student Loan Debt

Student loan debt in America currently stands at around $1.77 trillion, and many adults say that this debt has created a significant hurdle that has kept them from achieving their financial goals. While the government is attempting to make education more affordable, it is extremely beneficial to teach your teen how to pay for college without ending up with so much student loan debt. You can also visit Tate for questions about student loan forgiveness to explore options for reducing existing debt.

Below are a few ways they could do this:

• Apply for things like grants, awards, and scholarships first (as many as they can).
• Continue living at home with you to avoid the cost of room and board.
• Take a gap year to find a job and save more money for tuition.
• Take Advanced Placement courses in high school that will limit how many college courses they need to take.
• Attend community college first and then transfer to a state college for their bachelor’s degree.
• Attend a local, in-state college as it’s cheaper than going out-of-state.
• If taking out student loans is necessary, avoid private loans and only take out federal loans.

4. Talk to Them About Saving for Big Expenses

Teaching your teen about general budgeting and financial planning is important, but it can also be helpful to talk to them about saving up for specific things, like buying a car. Your teen might already have a car, but in many situations buying a car is one of the first big milestone expenses teens and young adults face aside from paying for college.

You can use the following strategies to teach your Gen Z teen how to save for a car (or any other big expenses):

• Have your teen establish how much they want to save to afford the car and write down their savings goal.
• Help them understand that there can be additional expenses aside from the cost of the car, such as title and registration fees, sales tax, and insurance.
• Once they have an idea of how much they will need, help them create a budget that includes all their current expenses plus this new one so they can get a better idea of where they might need to cut back costs to help them save.
• Have them set up a designated savings account for the car purchase so they can start putting money into that account and keep it separate from the rest of their money.

In Summary

While your teen can also learn how to be more independent by taking on the responsibility of learning to budget and plan on their own, they won’t have the insights that you do from your years of experience. Even if they don’t seem that interested initially, they will likely thank you down the road when everything you taught them helped them become more financially stable and capable of achieving their goals.

About the Author
Katie Brenneman is a passionate writer specializing in education, mental health, family lifestyle and online safety. When she isn’t writing, you can find her with her nose buried in a book or hiking with her dog, Charlie. You can follow her on Twitter.