If you’re earning money for the first time or starting to think seriously about your future, you’re not alone. Most Gen Zers are asking the same questions: Where should my paycheck go? How do I build credit? What even is a credit score?

In fact, more than 70% of Gen Z says they wish they had learned more about personal finance in school. That’s why understanding the basics of money now can give you a real edge. This post will walk you through simple explanations of key money concepts like budgeting, credit, compound interest, and inflation—plus tips you can start using right away.

What Is Financial Literacy and Why Should You Care?

Financial literacy is just a fancy term for understanding how money works—how to earn it, spend it, save it, invest it, and protect it. But here’s the issue: Only 26% of Gen Z adults are considered financially literate, according to FINRA. That means most people your age are figuring it out on the go, often by making mistakes.

One Reddit user summed it up perfectly: “I felt lost AF trying to set up a bank account at 19.” The truth is, nobody is born knowing this stuff—but you can learn, and the sooner you do, the better your chances of building financial stability.

Budgeting: Know Where Every Dollar Goes

Budgeting helps you stay in control of your money so it doesn’t disappear on fast food and impulse buys. One easy method is the 50/30/20 rule. That means:

• 50% of your money goes to needs like rent, food, and bills
• 30% goes to wants like streaming services, going out, or clothes
• 20% goes to savings or paying off debt

Think of budgeting like counting calories. You don’t have to track every dollar every day, but knowing your limits helps you make better choices. You can use free apps like Mint or just look through your bank account to see where your money went last month.

Credit Scores: Your Adult Report Card

Your credit score is a three-digit number that shows how reliable you are with borrowing money. Lenders, landlords, and even employers might check it. A good score makes it easier to rent an apartment, get a credit card, or buy a car.

Your score depends on:

• Whether you pay your bills on time
• How much credit you’re using compared to your limit
• How long you’ve had credit accounts
• If you’ve opened a lot of new accounts recently
• The types of credit you have (credit cards, student loans, etc.)

One Redditor said they made decent money but got denied for an apartment because of a low credit score. To avoid that, start early. A secured credit card is a great option if you’re just getting started. Always pay it off in full each month.

Compound Interest: Your Money’s Superpower

Compound interest means earning interest on your interest over time. The earlier you start saving or investing, the more your money grows—even if you’re only putting in small amounts.

Example: If you invest $100 per month from age 22 to 30 and then stop, you could end up with more money than someone who starts at 30 and contributes double. Time matters more than how much you save.

Someone on Reddit described it like planting a money tree that gives you more seeds every year. That’s a great way to think about it.

Start small with something like a Roth IRA or even a high-yield savings account. Just $25 a month adds up over time.

Inflation: Why $20 Doesn’t Go As Far As It Used To

Inflation means prices go up over time. What you could buy for $5 a few years ago might cost $7 today. That means your money loses value if it just sits in a regular savings account or under your mattress.

A Big Mac in 1996 cost about $2.50. Today, it’s around $5.50. That’s inflation in action.

To protect your savings from inflation, keep your emergency fund in a high-yield savings account, and invest long-term savings in a retirement or investment account.

What Gen Z Is Saying About Money (Straight from Reddit)

Here are a few common struggles Gen Zers are sharing:

“I get my paycheck and it disappears in 3 days. Rent, food, gas—gone.”

“Buy now pay later ruined me. I owe more than I make in a month.”

“I feel like I’m 22 and already behind everyone else financially.”

You’re not alone. The struggle is real, but so is the progress you can make. Don’t compare your start to someone else’s middle.

Small Wins That Build Big Financial Confidence

You don’t need to have it all figured out. Just focus on one small win at a time:

• Track your net worth, even if it’s negative
• Pay off your first credit card
• Open your first savings account
• Talk about money with someone you trust
• Read one blog or listen to one podcast a week about money

These habits build your financial IQ over time—and that’s how you win.

Your First 5 Steps to Grow Your Money IQ

1. Open a no-fee checking and savings account
2. Set up a basic budget using the 50/30/20 rule
3. Check your credit score and get a beginner-friendly credit card
4. Start saving even $10 a week
5. Follow a personal finance creator or subreddit you trust

Sage Final Thoughts

Money can feel confusing, but it doesn’t have to stay that way. With a few simple steps, you can take control of your finances and build a future you’re proud of. The earlier you start, the better off you’ll be.