Rainy Day Resilience: Tips for Gen Z Navigating Climate Change, Inflation & a Housing Crisis

Maybe your work hours and income have been affected by extreme temperatures. Maybe your landlord is considering installing energy-efficient appliances and increasing your rent. Or maybe you’re seeing produce prices increase at the grocery store. No matter the situation, climate change and inflation are creeping in on your daily choices, and it’s important to prepare for it when you can — especially when it comes to your financial health.

Recently, SaverLife published research that examined the relationship between financial stability and climate change. What we learned is that the more climate-related events a SaverLife member is exposed to, the more they experience financial hardships like a loss of income, food shortages, and late payments on debt. And these hardships are on top of other competing financial priorities like rent and student loans.

With 43% of young adult SaverLife members sharing that they have less than one week’s worth of savings, it’s important that we talk about the unique impact climate change could have on Gen Zers’ futures. More importantly, it’s critical we provide actionable steps that they (and you!) can take to build resilience and still take steps toward long-term goals.

Here are 4 key points to prepare and plan for your future financial health:

1. Build an Emergency Fund

When it comes to building a resilient financial future, the best thing you can do is insulate your finances from disaster. And the best way to do this is by building an emergency fund to cover unexpected expenses. These could be related to a medical emergency, job loss, or extreme weather. Having money set aside to cover these expenses will help you stay on budget and keep your finances intact. 

When you’re just starting to build your emergency fund, it can be helpful to break the journey into steps.

1. First, aim to save $500. While this may not cover a big emergency, it can make a dent.
2. Next, work to save $1,000. This will start to help you cover larger unexpected expenses.
3. Finally, build your emergency fund to cover one to three months of take-home pay. This ensures that, if your income is interrupted, you can still cover your expenses while you work to get your income back on track.

If you aren’t sure where to save your emergency fund, there are a couple of options.

You can save it in an account at your regular bank. This ensures that the money is easily accessible to you. You could also consider saving it in a high-yield savings account (HYSA). A HYSA will earn you more interest than a regular savings account. This can be a plus because it means your money is working harder for you. The money is also typically available to you within one to three business days, so you can quickly access it when an emergency arises.

While having an emergency fund won’t stop you from experiencing the effects of climate change, it can help you feel prepared. And being prepared can go a long way in building resilience for the future.

2. Work to Build Good Credit

Building good credit is something you can do to create financial resilience. When times are uncertain, it’s helpful to know that you could qualify for financing if necessary. To build good credit, you want to practice good credit habits. This means not spending more on your credit card than you can afford to pay off. You’ll also want to be sure you make your credit card payment on time and avoid opening too many new credit lines at once. 

Building good credit won’t just help you get a good credit card. It can also help you qualify for lower insurance rates to protect your property in the case of severe weather. Good credit will also help you qualify for apartment leases and additional loans, should the need arise. This can help you stay prepared for anything that comes your way.

3. Invest in Companies who Support Your Beliefs

One way to build a resilient financial future is to make sure your money is working for you. Investing is a great way to do this.

In uncertain times, people can shy away from investing. But investing when you’re young gives your money longer to be in the market and longer to recover from any dips.

While as an investor, you can invest your money in anything, the new trend towards socially responsible investing (SRI) allows you to grow your money and invest in companies that support causes you believe in.

With SRI, you can invest in companies working to make a positive, sustainable, or social impact. By investing in these companies, your investment dollars can support companies working to reverse climate change, clean energy companies, or other companies with socially and environmentally proactive positions. This can serve the dual purpose of growing your portfolio and encouraging companies you believe in who are working to make change.

4. Create Healthy Habits

Finally, when working to build a resilient financial future, focus on your habits. If you build good financial habits as you’re getting started on your financial journey, this will set you up for success down the line. Some ways you can do this are:

• Take the time to create a spending plan for yourself
• Track your spending to be sure you stay on track
• Pay your bills on time
• Even if it’s only a small amount, get in the habit of saving from each paycheck

The habits you create with your money will typically carry you through life. So, focusing on your financial habits early will help you build financial resilience — toward climate change or any other unexpected challenges along the way.

Sometimes amid the negative news cycle, it can be hard to see a way forward. But the good news is your financial future is in your hands. By taking the time to develop your habits and set good practices in place for managing money, you can prepare yourself to respond to the unexpected ways that climate change permeates your life.