Financial Etiquette for Millennials and Generation Z

Financial Etiquette for Millennials and Generation Z

It’s no secret that every generation treats money differently. Baby boomers are usually steadfast when it comes to finances. Millennials and Generation Zers, who grew up in a more open and interconnected society, are generally becoming more transparent. Since many learn about money from their parents, generational differences can create a lot of confusion about what is true. From tipping to group vacations, here are the best practices.

Maybe your income has gone up significantly compared to your old comrades, or maybe it’s more of a comparative bellybutton. Either way, things can quickly get awkward when these differences become apparent — especially if you’ve known each other for a long time. But these differences are a normal part of adulthood, and the key to dealing with them with grace is honesty and good communication.

If activities with your friends are breaking your bank, don’t be afraid to tell them, and count yourself out the occasional waste. You can always offer free and inexpensive activities for the group. And if you’re not comfortable sharing that the reason for the transfer of experiences is a financial one, just “not this time” can suffice. It’s better to deal with a little discomfort up front than to commit to something you can’t stand.

If the tables have turned, and your friend or family member isn’t as well off as you, focus on supporting them and spending time with them in a way they can afford. Maybe that’s what they want from you anyway.

Contrary to popular belief, baby boomers are actually the most generous flip-flops. According to a 2022 CreditCards.com survey, 87 percent of boomers who go to restaurants tip their server every time. Only 60 percent of millennials reported doing the same.

Tipping may seem like a social maze of confusion, but the rules of tipping are actually pretty simple. For wait staff at a sit-down restaurant, plan to pay 15 percent to 20 percent of the bill. If you can afford it, it’s best to tip a higher tip, especially now, because of the challenges the pandemic is causing for those working in the service industry.

Another stressful situation we all know: You’re in a group of friends, some are richer than others, and the bill will come. What are you doing?

In this case, the best financial etiquette is to hit the rewind button and decide on a plan before the waiting staff takes your requests. Ask everyone as soon as you are seated: “Would you rather split the check, or do separate orders?” According to a TD Ameritrade survey, millennials are more likely to split the bill when dining with friends (49 percent) than when paying separately (38 percent).

Knowing what you want to do ahead of time prevents big hassles for wait staff later splitting checks. It ensures that everyone is satisfied, and reduces choice anxiety throughout the meal. If talking about what’s on your mind doesn’t always come naturally, it can be a little uncomfortable, especially if your opinion veers from consensus. But again, it’s better to deal with the discomfort head-on rather than straining your budget.

Have you and your friends or co-workers ever been excited to go together to buy an expensive gift for someone? Again, the key here is good communication. If you are the organizer, ask everyone what they are comfortable with contributing and suggest something within that price range.

Or, if a group asks you for more money than you’re willing to pay, try saying something like, “I’m sorry. I can only afford $15.” They may be grateful for your contribution, but if they don’t accept it, you can buy a gift on your own terms instead. If someone puts you on the spot about giving a group gift and you don’t want to contribute at all, you might say that you’re considering buying your own.

Likewise, when planning group trips, a good rule of thumb is to cut back on them so that everyone can afford them. If you’re the organizer, be upfront about the base cost of the trip, as well as any group trips while you’re there.

If one person’s budget is lower than the budget of the rest of the group, you have two options.

It’s okay to ask your friends if they would be willing to accept your financial help. And you don’t have to give them money directly, which can be embarrassing. You can offer to share a room with them, or use your points to book a flight for them.

You can try to arrange trips so that no one has to overspend or miss something they want to do. Perhaps one day it could be a spa day for some and a hiking or museum tour for others.

If your budget is lower, it is important that you take responsibility for your situation. Instead of trying to cancel expensive plans for the whole group, come up with an alternative for yourself and leave the invitation open to anyone who might want to join you. If you think you’ll have to pass on most of the experiences and don’t have another friend with similar needs, you may want to reconsider going on the trip. It puts you and your friends in an awkward position if you are constantly venturing out on your own.

Whether you’re asking for donations to repair your car or to a charity you’re raising money for, there are some good financial etiquette tips to keep in mind. First, keep donation requests to a minimum. If you always ask for money, it is easy for people to get upset or annoy you.

Second, be prepared to explain how the money will help. If you let them know why a particular charity is important to you, or how much their money will make a difference to you, people are more likely to open their wallets.

Finally, don’t put people on the spot. Although it’s the easiest way to get a refund, it’s also the easiest way to make someone feel manipulated into a donation. Send a broadcast to your network via email or social media. Give them a chance to proactively choose to help or not help.

About a third of people regret lending money or co-signing a loan to friends and family, according to a 2019 Bankrate survey. Lots of things can go wrong, which is why some people have a strict no-lending policy.

But if you choose to borrow from or lend to someone dear to you, be sure to keep these rules in mind.

Do not lend any money that you cannot afford to lose.

Make the agreement official. It may sound strange, but write it down and state the consequences of not paying. This way, everyone is upfront about what they need to do, and what happens if they don’t.

There’s no doubt about it: as beautiful and memorable weddings are, they are also expensive. The average cost of attending a wedding as a guest is $460. If that’s not within your budget, it’s okay to scale back or skip your participation altogether. If you can’t afford a $500 plane ticket, consider sending a handwritten card and gift instead.

If you know you’ll be spending on flights in the future, you may also earn points and miles that you can put into a free fight. The best travel credit cards offer boosted reward rates on travel purchases, and some even offer sign-up rewards of $1,000 or more.

If you’re planning a wedding-related party, it’s a good idea to connect with the most important people ahead of time. Put some of your thoughts together with them before you make aggressive plans. Ask them, “We were thinking about a stag party to northern Michigan, is that something you’d be interested in? How about a weekend at a nearby Airbnb?”

Opinions differ on the etiquette of Venmo, but most people agree on the basics: getting the transaction done in a timely manner. Don’t fall out. Same day payment, whether you are sending or ordering, is best for both parties.

If you’re asking for money from someone, it’s a good idea to give them an alert through their preferred method of communication first. For example, if you normally talk through Facebook Messenger, send them a quick message first, telling them they can expect to order Venmo and why. Feel free to use emojis to keep it fun.

Another big change in the intergenerational tide is whether it is acceptable to discuss how much you earn and how you spend it. In a recent Bankrate survey, 42 percent of Generation Z workers and 40 percent of Millennials shared their salaries with coworkers, versus just 19 percent of Baby Boomers.

Having said that, there are tactful ways to ask about someone’s salary. Don’t ask your co-workers while they’re around the clock. Wait until you’re at an outside event like happy hour, and test the situation by saying something like, “At Glassdoor, the average salary for our position is $40,000. Do you think that’s accurate?” This can lead to a discussion of what you both earn if the person The other is open to it.

Perhaps it’s a culture of increased engagement or familiarity with being saddled with a huge student loan debt, but it’s becoming acceptable to ask how much you’re paying for things too. In a 2017 Realtor.com survey, 81 percent of young adults had no qualms when asked about the price of a home, while people of older generations were split on whether they considered it a bogus bug.

If you’re on the fence about the question and really want to know, a good way to test the situation is by asking a broader question like, “How much do homes in this area cost?” This allows the person to be specific or public with the information they are giving you in a way that they feel comfortable with.

bottom line

When you reach adulthood, you will realize that everyone manages money differently, and that some have more to work with than others. But dealing with these differences doesn’t have to be difficult. The key is to be open about your situation and what you feel comfortable with up front, and to be respectful of other people’s attitudes. This may be intimidating at first, but the discomfort will wear off with practice.

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