Why Saving Feels Like Climbing a Mountain

For Gen Z, putting money aside has become harder than ever. Living costs, from housing to daily expenses, rise faster than wages. Many young people juggle rent, student loans, and stagnant paychecks. It’s easy to feel like there’s nothing left to save, let alone invest. However, even small steps toward investing can lead to significant financial rewards down the road. Here’s our guide on how to invest money if you’re a Gen Z.

What’s the issue?

Since 2005, the average hourly earnings in the US grew by approximately 75%. This alone is a good news, but when you take a closer look at the growth of prices, it starts looking much more girm. Firstly, the College Tuition and fees - those grew by approximately 170% in the last 20 years, college textbooks are 150% more expensive than they were two decades ago, and when you slap the cost of rent on top of that - it’s a recipe for a disaster. According to Zillow, the the median rent for all bedrooms and all property types in New York, NY is $3,375. For studios, it’s as much as $2,800.

Source: Education Data Initative

Knowing this issue, Gen Z face huge obstacles, and simply cannot afford to save or invest money, but with few tips, they may be able to just get the ball rolling - once some good habits around investing are created, it get’s much easier over time.

Tips on how to invest if you’re Gen Z

Start Investing Early

Time is your biggest ally in investing. The earlier you start, the more you benefit from compound interest, where your money grows on itself. For instance, if you invest $100 monthly starting at age 20, you could have nearly double the amount saved compared to starting at 30, assuming a modest return. Starting early doesn’t mean you need a fortune—it means letting time do the heavy lifting.

Take a look at the graph from of your savings after 20 years. The red line indicates your savings with just a $1000 set aside each month. In 5 years time, you’re looking at only approximately $10k of difference with the compound interest, but the next 5 years adds another $32k on top of it. If you keep your persistence, and dedicate $1000 per month, in the last 5 years, you will almost double your money.

Build a Safety Net First

Before getting into more serious investments, prioritize building a safety net. Set aside three to six months’ worth of expenses in a high-yield savings account. This cushion protects you from unexpected expenses, like medical bills or sudden job loss. If you get into debt, your return from investment won’t be able to crawl you out of it, because the interest on any kind of debt is most likely to outweigh the interest you can pull off by investing.

Alan Andrews, an expert from the secured loans provider industry, emphasized the importance of having a safety net and avoiding debt: “Building a safety net is your first financial priority. Debt almost always costs more than any potential investment return, so paying it off is crucial. Focus on eliminating high-interest obligations before investing, make sure you’ve paid off your car, or paid off your student loans. Without this foundation, you're likely chasing returns while losing more to debt—a strategy that rarely pays off”

Avoid High Risks in the Beginning

When you’re new to investing, steer clear of high-risk options like speculative stocks. While tempting, these carry a significant risk of loss. Instead, of buying $1000 worth of memecoins, and checking the Kekius Maximus price every day, hoping it takes off, focus on traditional, safer options like treasury bonds, index funds, or ETFs. These provide steady growth without unnecessary stress. Investing isn’t about quick wins; it’s about building sustainable wealth over time, and as you already know, time is your biggest ally in investing.

Use technologies to your advantage

There are many areas where Gen Z are much brighter than older generations, and making the best of available technologies is certainly one of them. Currently, there are plenty of applications and tools that can help you establish better habits, cut your unwanted spendings etc.

An example of such app is Rocketmoney, an application that tracks your spendings, and suggests what you can cut. With the subscription based business models everywhere, it’s easy to lose track of your services, or even forget about something completely. With those apps, you can see every single subscription that you are paying for, and you can easily cancel it with a couple of clicks. Not interested in watching Netflix anymore? You can cancel it. Stopped going to the gym, but still paying for the membership? Another expense you can cut.

Sometimes, it’s much easier to cut costs, rather than make more money. And we’re not telling anyone to stop drinking coffee, or to live like a monk in the depths of a monastery, but with so much going on in the World, you may need a bit of a help to keep track of all your expenses, and potentially cut some of them.

Conclusion

Investing as a Gen Z may seem tough with rising costs and stagnant wages, but small, deliberate actions can make a big difference. Start early to take full advantage of compound interest, build a safety net to stay prepared for life’s surprises, and avoid risky investments that can jeopardize your progress. Use technology to streamline your finances, diversify your portfolio to reduce risk, and continuously learn about smart financial practices.

While the economy presents challenges, it also offers opportunities for those willing to adapt. Each step, no matter how small, brings you closer to financial freedom. The key is consistency and a willingness to learn and grow. The future may feel uncertain, but by taking control today, you’re setting the stage for a brighter tomorrow. With persistence and smart planning, you can transform today’s difficulties into a stepping stone for lasting success.