3 smart pieces of money advice for Gen Z college grads worried about the future

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• Gen Z college grads are facing a tough job market and inflation on everyday goods continues to rise.
• Financial planners warn lifestyle creep can often set new college grads back.
• Post-grad, young adults should take control of their finances by creating a budget that suits their needs.

Facing what some are calling a career apocalypse, many Gen Z college grads are increasingly anxious about their job prospects and financial futures.

Most importantly, what new grads should remember is that time is on their side. Implementing healthy financial habits now eases short-term financial stress and lays the foundation for a secure financial future.

To help navigate this new chapter, financial planners share key money tips to help new grads take control of their finances and build financial stability.

1. Avoid lifestyle creep by prioritizing savings

It's tempting to complete undergrad and have a strong desire to live a dynamic adult life. However, financial planners warn lifestyle creep can set new grads back and eat away at their income and savings.

"Unless you are very lucky, you're not going to get your first job, and make enough to dramatically change your lifestyle," said Gloria S Garcia Cisneros, CFP®, a wealth manager at Lourd Murray. "Just watching for that lifestyle creep and being aware that this is probably the least amount of money you're going to make is important. Your salary will go up over time, so it's normal for your needs to take up a large portion of your income. Right now, there may not be a lot left for fun stuff, and that's OK."

Instead of abandoning frugal habits created in college, new grads right now should focus on continuing to save as much as possible when entering their first jobs postgrad.

"Time is your most valuable resource that goes for your personal relationships, and it also matters from a financial aspect of things," said Andrew Rotz, MBA, CFP®, founding guide and advisor at Fruitful. "Doing things the right way as early as possible in your career will massively pay off over the long run, right? We know the value of compound interest. You're not going to see it in year one, but if you fast forward to year 15, the fact that you took control of your finances at maybe 22 years old versus 30 years old has a massive impact on your overall financial health."

To get the most out of their savings, new grads should consider the best high-yield savings accounts, which offer higher interest rates than traditional accounts. Learning how to save money effectively can make a major difference over time, especially with the power of compound interest on your side.

2. Figure out what your budget is and determine if it works for you

When transitioning into postgrad life, you'll need time to sort out certain things like how to budget, your career options, housing, and more. These are things you can't expedite, and financial planners actually say taking your time and making thoughtful choices early on can pay off significantly in the long run.

"Everybody has a budget, you just might not be in control of it," said Rotz. "So the first step is making some intentional decisions."

Budgeting can be a tough challenge for college students as many rely on seasonal work, temporary employment, or student loans due to academic schedules. However, as Rotz suggested, taking control of your finances can help you create a budget that works for your unique situation. Financial experts typically recommend creating a zero-based budget, which involves allocating every dollar of your income to a specific expense or savings goal.

"It starts with listing your income after taxes, what you would get from your job, and then writing down all your essential needs," said Garcia Cisneros. "You'll need to see, 'Okay, do I have enough for all this stuff?' Know what's coming in, know what you're spending it on, and try to give every dollar a job."

Creating a zero-based budget can be challenging for new grads who are juggling multiple financial priorities, such as paying off debt, saving for a new place, and budgeting for fun. This is where the best budgeting apps like Rocket Money and Quicken Simplifi can come in handy. These tools can help you track your expenses, stay on top of debt payments, and even set aside money for things you enjoy.

3. Build your credit wisely and pay off any credit card debt ASAP

Credit card debt is a growing concern for college students and Gen Z college grads.

Nearly 65% of students have credit card debt, according to a College Finance study, and over half say it causes them the most financial worry. With national credit card balances topping $1.15 trillion in Q1 2024 and average credit card APRs around 20%, this type of debt can quickly spiral.

"Paying just the minimum is going to be very costly," said Garcia Cisneros. "You'll end up paying way more than you actually even borrowed from the card." That's why paying off credit card debt should be a priority post-grad, especially before bigger expenses like moving out or saving for long-term goals.

Still, using credit cards wisely can help you build your credit. "Credit scores matter, but only when you're actually going to apply for something that needs the credit, like a car loan or a mortgage," said Rotz. "If you build a good, robust money management system and stay accountable to it, that will absolutely positively impact your credit score, and that's what we care about in the long run."

For those just starting out, Garcia Cisneros recommends a secured credit card, which acts like "a hybrid between a debit and credit card." Once you have that first secured card—or get approved for a regular one—the goal, she says, is simple: "Just pay off that card every month." Paying off your credit card balance in full monthly is generally a good practice as it eliminates the chance of interest charges piling up. If you do need more time to pay off a large purchase, consider a 0% APR introductory credit card to avoid interest temporarily.

Other Tips for New Grads

With smart money habits in mind, new grads can make their money work for them, not against them. Here are a few more things to keep in mind:

Understand your student loans. Whether you're still in your grace period or already making payments, know what you owe and when it's due. Look into federal repayment plans, student loan refinancing options, or forgiveness programs that may apply to your career path.

Budget for your next big goal. Whether you're thinking about grad school, traveling abroad, or moving to a new city, start planning early. Saving small amounts consistently can make a big difference and reduce financial stress when it's time to make your move.

Don't be afraid to ask for help. Financial literacy isn't something most people are taught in school. Tap into resources like nonprofit credit counselors, financial advisors, or even the best banks for young adults, which often offer free financial planning tools.