Key Takeaways
\nGen Z\u2019s biggest money stresses have real fixes.The first goal is to have \u201cfall back money\u201d\u2014$10,000 to $20,000, so one bad month doesn\u2019t send you into debt.You don\u2019t have to choose between paying off debt or investing: A \u201cmiddle-ground\u201d strategy\u2014do both every month\u2014keeps interest from piling up while still letting you capture market gains.Small habits move the needle fast:<\/p>\n
Seventy percent of Gen Zers tell surveyors they lose sleep over money. This anxiety has a concrete cause. In 2025, the average credit score for young adults<\/a> dropped to 676, the steepest decline of any generation.\u200b\n<\/p>\n We asked Ken Mahoney, CEO of Mahoney Asset Management, and Taylor Kovar, CEO and founder of 11 Financial, for their advice on how to tackle Gen Zers’ 10 most urgent questions.\n<\/p>\n 1. How Much Should I Have Saved by Age 25? <\/p>\n “There\u2019s no universal target because incomes and expenses vary a lot at that age,” Kovar said. “Many people aim to save enough to cover one month of living costs as a starting point and try to build from there as their career grows.\u00a0”\n<\/p>\n “We would hope that someone at 25 should have around $10,000 to $20,000 for emergencies,” Mahoney said. These savings can act as “fall back money,” and prevent things like a job loss from forcing you into debt.\n<\/p>\n If you\u2019re not close to that figure, don\u2019t panic. Many young adults aren\u2019t. What matters is building momentum: “It is vital to contribute to a 401(k) through work or an IRA early and often, as much as you can reasonably afford,” Mahoney said.\n<\/p>\n “Hitting those early milestones can create good long-term habits,” Kovar added.\n<\/p>\n<\/p>\n 2. Should I Invest or Pay off Debt First? <\/p>\n “We think there is a middle ground of being able to achieve both at the same time,” Mahoney said.\n<\/p>\n Focusing solely on paying your debts could mean missing out on market growth. But putting all your funds into investments could allow interest, especially on high-interest credit cards<\/a>, to build faster than any investment returns.\n<\/p>\n Mahoney suggests doing both: put money toward paying down your debt and into a retirement account every month.<\/p>\n 3. What\u2019s the Best Way to Build Credit Without Going Into Debt? <\/p>\n Use a credit card like a debit card. “Never utilize more than you can afford and pay off the balances each month, and do not fall into the trap of just paying the minimum balance,” Mahoney said.\n<\/p>\n Pay the balance off immediately after the charge posts, Mahoney and Kovar suggested. Don’t wait for the monthly statement. This helps you build up your credit score while not putting you on the hook for interest payments. Another option, Kovar said, is to start with a secured credit card<\/a> if you “want an extra layer of structure and limits.”<\/p>\n<\/p>\n 4. How Do I Start Investing When I Don’t Have Much Money? <\/p>\n If you can only invest a little, that\u2019s okay\u2014most people begin that way. Start by opening a brokerage or retirement account, choosing an\u00a0index fund that tracks the broad market<\/a>, and contributing when you have room in your budget, preferably through dollar cost averaging<\/a>, which is paying in the same amount periodically, no matter how the market is doing.\n<\/p>\n Mahoney says learning the fundamentals is just as valuable as the money itself, and recommends William J.\u00a0O\u2019Neil\u2019s popular 2009 book, “How To Make Money In Stocks,” as a good starting point.<\/p>\n 5. Is Cryptocurrency Worth Considering? <\/p>\n Mahoney sees bitcoin<\/a> as the exception in the crypto world. Its decentralized structure gives it real staying power, he said, while many other coins are driven more by hype and “are not worth looking at.”<\/p>\n 6. How Can I Afford Rent and Still Save? <\/p>\n “This definitely varies from person to person,” Mahoney said. But you can start by looking at the “unit cost” of your daily habits\u2014cutting out one food delivery, one subscription renewal at a time. Getting meals delivered, for instance, can cost double what it would take to cook at home, and that gap widens over time.\n<\/p>\n You can also look for savings by cutting out waste<\/a>, like unused subscriptions. “There are many ways to save that add up,” he said.<\/p>\n 7. What Percentage of my Income Can go Towards Fun? <\/p>\n “Only worrying about saving and doing nothing is playing the game of life wrong,” Mahoney said.\n<\/p>\n He\u2019s not saying to empty your savings to have fun, just that you need space for enjoyment, too. His solution is \u201ccash stuffing\u201d<\/a>: setting aside a fixed amount of cash for things you love to do so you don’t end up overspending.\n<\/p>\n Many financial planners suggest using a max of 5% to 20% of your take-home pay, depending on how much debt and other bills you have. The point is to have a target percentage that you can keep to without blowing your budget.\n<\/p>\n<\/p>\n 8. Should I Open a Roth Account Now or Wait? <\/p>\n A Roth retirement account<\/a>, like an IRA or 401(k), offers a distinct tax advantage for younger earners, Mahoney said. You contribute money that has already been taxed, so your withdrawals in retirement are tax-free.\n<\/p>\n Since you are likely in a lower tax bracket now than you’ll be in later, paying the taxes up front makes sense. Many Gen Zers obviously agree: about a fifth (19.4%) of Gen Z workers, according to Fidelity, are contributing to a Roth 401(k)<\/a>.<\/p>\n 9. How do I Maintain a Budget When my Income Changes Every Month? <\/p>\n You need to ensure you cover your fixed expenses first (rent, car payment, etc.). When you have a high-income month, save the extra immediately. This will act as a buffer for the months when your income is lower.\n<\/p>\n Treat the extra cash as savings, not a bonus, Mahoney said.<\/p>\n 10. What if I Lose Money in the Stock Market? <\/p>\n “If someone loses money in the market or in speculative investments like crypto or forex, it may help to step back, understand what happened, and refocus on long-term goals rather than reacting emotionally,” Kovar said.\n<\/p>\n