April 18, 2025

Ask AI: Financial Literacy for Gen Z

Category: Administration, Payroll | Tags: finances

Posted by Meagan

For this year’s financial literacy post, we wanted to do a deep dive for the next generation. Starting with Gen Z: those that are about to hit the job market, maybe for the first time, or full-time.

Want to see some of our other Financial Literacy Month posts? Start here: teaching kids about financial literacy. Or here for pastors: ministerial finances. Each April we lean into the financial literacy theme as it’s an important concept for each of our clients.

According to ChatGPT, here are the top 7 things the next generation needs to focus on to be financially literate.

Helping the next generation with financial literacy—especially those about to enter the job market—requires a mix of practical skills, mindset shifts, and access to the right resources. Here are some top tips:

1. Budgeting & Cash Flow Awareness

• Teach them zero-based budgeting (giving every dollar a job).
• Encourage using 50/30/20 budgeting (50% needs, 30% wants, 20% savings).
• Stress tracking expenses (apps like Mint, YNAB, or even spreadsheets).

2. Understanding Paychecks & Taxes

• Explain the difference between gross vs. net pay (after taxes & deductions).
• Walk through a sample paycheck: income tax, Social Security, Medicare, 401(k) deductions.
• Highlight common tax mistakes (e.g., forgetting to update W-4 withholdings).

3. Building a Strong Credit Score

• Teach how credit scores work (payment history, utilization, length of history, etc.).
• Warn against maxing out credit cards or only making minimum payments.
• Encourage starting with a secured credit card or becoming an authorized user.

4. Smart Debt Management

• Discuss the differences between good debt (investments like education) vs. bad debt (high-interest loans).
• Emphasize the importance of paying off high-interest debt first (avalanche method).
• Introduce student loan repayment strategies (income-driven plans, refinancing, etc.).

5. Saving & Investing Early

• Explain the power of compound interest (the earlier, the better).
• Introduce employer-sponsored retirement plans (401(k), 403(b), employer match, etc.).
• Encourage Roth IRAs for tax-free growth.
• Teach index funds vs. individual stocks to simplify investing.

6. Negotiating Salary & Benefits

• Remind them that salary isn’t the only factor—look at health insurance, 401(k) match, PTO, etc.
• Teach how to research fair pay (Glassdoor, LinkedIn Salary, etc.).
• Encourage negotiation strategies—always counteroffer!

7. Mindset & Financial Habits

• Shift thinking from paycheck to paycheck → long-term wealth building.
• Introduce the concept of emergency funds (3-6 months of expenses in a high-yield savings account).
• Encourage habit stacking (e.g., automating savings with every paycheck).

And we aren’t done with our AI friend. Based on the answer above, AI made a worksheet to pass along to those young professionals. It’s free to download and edit to make it your own.

We hope you’ve found a nugget or two to share with the next generation. As we know you already have your ducks in a row with your Good Faith Accounting Partners.