10 Frugal Money Habits Helping Gen Z Save Money (2024)

It’s never too soon to start building healthy financial habits. In fact, the earlier you get started, the easier it’ll be to maintain these habits for the long haul. This can make it easier to save money, prepare for emergencies and plan for other long-term goals, like retirement.

While most Gen Zers are still in school or just starting out in their careers, it’s still a good idea to start implementing some frugal money habits right now. While this can take some financial discipline and consistency, it’s worth it in the long run.

That said, here are 10 frugal money habits that Gen Z can use to start building their savings and work toward a financially secure future.

Spend Less Than You Make

While this might seem like a given, spending less money than you earn is a great starting point when it comes to saving money and living more frugally. This might mean cutting out unnecessary expenses or choosing a cheaper apartment or a used vehicle. It could also mean increasing your savings whenever possible, such as when you start to earn more money.

“Spend less money than you make,” said Mary Hines Droesch, head of consumer and small business products at Bank of America. “According to Bank of America’s ‘2022 Better Money Habits study,’ Gen Z find it more difficult to save (73%) given the current economic environment. One way to save more is by ‘paying yourself first.'”

Essentially, paying yourself first means depositing a portion of your paycheck into a separate savings account every time you get paid. And if you find it hard to consistently contribute to your savings, you can always set up automatic transfers from your checking to your savings account.

“Gen Zers should make a conscious effort to live under their means by leaving just enough money in their checking accounts to cover monthly necessities and a couple small splurges,” said Droesch. “Sticking to this approach will help Gen Zers build a strong financial foundation early in their professional lives.”

Invest Extra Cash From Your Paycheck

When you’re working and earning a paycheck, the last thing you might want to do is save or invest it. But if you take even a little bit of your income and start investing it, you could see some significant savings over time. Then, by the time you start wishing you had more money for things like a down payment on a house or retirement, you’ll already have a nice nest egg.

“Start thinking about your investments now. With many Gen Zers starting their first jobs, they may feel tempted to go on a spending spree with their first paychecks,” said Droesch.

The same Bank of America survey found that many people from Gen Z understand basic financial concepts, like debt management. However, a lot of Gen Z also struggles with things like investing, saving for retirement and building an emergency fund.

“However, an easy way to get started [with investing] is through a workplace retirement savings program, like a 401(k) plan, which [Gen Zers] can set up to automatically withdraw from their paycheck each month,” said Droesch. “Some employers also offer 401(k) matching opportunities, which is essentially free money that could make a major difference in overall savings. By putting aside money for their retirement now, Gen Zers can ultimately be better prepared for their financial future.”

Take Advantage of Compound Interest Early On

Retirement might seem like a distant thing, especially if you’re in your teens or early 20s. But the sooner you start putting aside money in an account that earns compound interest, the better off you’ll be. This is because compound interest builds upon itself over time.

“The best frugal habit for younger people is to unleash the power of compound interest by contributing to your 401(k), 403(b) or similar retirement program,” said Scott Lieberman, founder of TouchdownMoney.com. “Giving up just 3% of your salary today can make you financially comfortable when you retire.”

See If Your Employer Offers a Student Loan Match

Around 36% of Gen Zers aged 20-25 had student debt in 2022, with an average student debt load of $20,900. If you’re trying to make student loan payments, it can be difficult to save money. That’s where the SECURE Act 2.0 comes in.

“There’s a new law called the SECURE Act 2.0 that actually makes this easier for people who have student loans,” said Lieberman. “Starting in 2024, your employer can match your student loan payments as their contribution to your 401(k) or similar retirement plan. Ask your employer for more information. This can be life-changing for anyone with student loans!”

Take On a Money Challenge

Many types of money challenges are out there, but most are designed to help you save more money and live more frugally. One such challenge is the “spending fast” challenge — that is, a “no spending period.”

“This personal finance technique allows Gen Zers to reset their spending by cutting off any non-essential purchases for a specified length of time — a week, month, multiple months,” said Droesch. “Although it might seem daunting, Gen Zers should think of it as putting their spending on an elimination diet to see what they truly need and what they can live without. It’s an opportunity for Gen Zers to be economical and develop a healthier relationship with spending.”

Another money savings challenge is the 52-week challenge. With this, you set aside a certain amount of money each week for an entire year. During the first week, you only need to save $1. On the second week, you’ll save $2. Continue increasing how much you save by a dollar every week. In the final week, you should set aside $52. By the end of the year, you’ll have $1,378.

Shop Generic

“GenZ is building their financial foundation, which means any small opportunity to save can have a long-term impact,” said Cody Sparks, the director of retail banking at UMB Bank.

But no matter how frugally you try to live, certain expenses can’t be fully avoided, such as groceries. That’s why it’s important to think about what you buy.

“Shop off brand,” said Sparks. “Food is one of the hardest hit sectors right now, but something we all have to buy regularly. When shopping for the week, look for off-brand products. The grocery store might have their own brand that is less expensive, and typically the product quality is exactly the same as the name brand. It also helps to stick to your list and meal plan as much as possible to avoid food waste.”

Use Loyalty Programs

Many major grocery stores have loyalty programs that come with discounts or promotions on certain in-store products. Certain gas stations have similar programs, which can save you money on fuel.

“Check to see if your most-frequented gas station offers loyalty or rewards programs which can lead to dollars off at the pump,” said Sparks.

Track Your Expenses — Especially Your Utilities

Creating a budget early on in life can help you build healthy money management habits. It can also help you stay on track with your financial goals, while giving you a better sense of where your money is going each month. You can tailor your budget to your needs and adjust it as your income or expenses change over the coming years.

“Use an app,” suggested Sparks. “It can also be helpful to track your financial goals, spending and saving in an app that you can check regularly on your phone. This puts your finances at your fingertips.”

Utilities are another thing to be aware of, since this is an expense that can cut into your available funds and make saving harder.

“Your utility provider might have an assistance program you can opt-in to or a payment plan that can help you better budget and predict these costs,” said Sparks. “You can also contact the company to see if you can negotiate your bills — especially for your cell phone plan. There might be a part of the plan you are no longer using but still paying for. Review your bills carefully to see if there is an opportunity to contact them to get your bill reduced.”

Use Technology To Save Money

Much of Gen Z has grown up in a highly digital age, but not everyone’s taking advantage of the free, readily available technologies that exist to help them save money or shop frugally. One such option is to use a free browser extension that helps you find the best deals when shopping.

“As the generation that grew up in a digital age, Gen Z can greatly benefit from developing specific frugal habits. One highly effective habit is utilizing money-saving browser extensions,” said Jonathan Prescott, the VP of e-commerce at CouponBirds. “By incorporating [these tools] into their online shopping routine, Gen Z individuals who are more inclined towards gaming and digital services can make wise choices and save a significant amount of money over time.”

Prescott added, “Given the economic uncertainty and high burden of student loan debts, practicing frugality through browser extensions helps Gen Z individuals stretch their limited budgets and make smarter purchasing decisions. By utilizing these extensions, they can easily access and apply discount codes and coupons, ultimately resulting in money saved on their online purchases.”

While online extensions are one way to save money using technology, they’re not the only option. Other tools include online budgeting apps, high-yield savings accounts and digital cash-back programs.

Automate Your Finances

Juggling multiple bills with different due dates can be tricky, especially in the early days of adulthood. If you find yourself missing — or almost missing — payments, you might want to consider automating your bills.

But if you don’t feel comfortable with automation, consider inputting all of your regular expenses on a spreadsheet or on a budgeting app.

“If your bills are due at different points throughout the month, it could help to write down the amount due and date in a calendar or budget app to help you plan,” said Sparks. “By seeing everything down on paper or in an app, you can keep track of when withdraws are going to happen and allocate your spending appropriately.”

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