Money mistakes can start early, and Gen Zers are at risk of making some big errors, according to Katrin Kaurov, the CEO and cofounder of social financial platform Frich.
She says modeling between the ages of 14 and 24 taught her to manage her money in a way many that age do not have to.
“I would spend three months in Milan, three months in London, and three months in Hong Kong,” Kaurov told Business Insider. “So I basically had to become financially independent and be an adult at the age of 14, 15, 16 when everyone else was going to parties.”
When she moved to New York in her 20s, Kaurov realized this wasn’t the norm. She saw her friends flounder when it came to their finances. They had no clue how to manage their money, yet seemed to be living lavish lives on social media.
Kaurov and her friend Aleksandra Medina founded Frich in response to what they saw, aiming to help young people learn “radical transparency and honesty” around money.
“Money shouldn’t be lonely and sad and anxiety-inducing,” Kaurov said. “We know that money is behind every decision that you make in life, and it doesn’t have to be scary.”
Here are some of the biggest mistakes Kaurov thinks Gen Zers are making, and what they can do to fix them.
1. Believing everything on social media
Social media, especially TikTok, is full of financial advice. Not all of it is good.
Kaurov said that while TikToks and Instagram Reels are great for opening up the conversation about money, much is “not really verified.”
“You see a 17-year-old TikTok who is like, this is how I built a seven-figure business overnight, I’m 17 and I’m already retired. I think it creates very unrealistic portrayals of how people are managing money,” she said. “It creates an idea that Gen Z has it together with money, when in reality, most people don’t.”
Young people shouldn’t compare themselves to these posts, Kaurov said, and instead think about their own goals and aspirations.
2. Not getting real about credit card debt
Gen Zers are racking up a lot of credit card debt. They need to get real about this if they’re going to face all of their challenges, Kaurov said, such as saving enough for a down payment on a house.
Social media, again, plays a part here. “Especially in cities like New York or London, it just seems like everyone is having dinners out every night and they go on these amazing trips,” she said. “It just makes you wonder, wait, why am I always broke? Am I doing something wrong?”
You never see whether your peers are in debt, “which most of them are,” Kaurov said.
“You never really see the truth. Maybe their card is getting declined at the restaurant.”
3. Making budgets too restrictive
Kaurov said people can create budgets with too much enthusiasm and optimism for how little money they will spend from month to month.
She said a budget should be about creating a realistic guideline for spending and saving — and if it’s too restrictive, then rethink it. “Trial and error is crucial and will allow people to find what kind of budget works best for them.”
4. Not setting aside enough time
Kaurov recommends young people set aside about 30 minutes a week for a “money date.”
“The same way we review our fitness goals and our career goals,” she said. “Review what you’re doing with money, what are your goals, where are you going?
“Having a money date when you actually review what you’re spending on, and go step by step.”
5. Reliance on BNPL apps
Buy-now-pay-later (BNPL) services such as Klarna and Affirm have made it easier than ever to spend.
Kaurov warned that relying on them can be catastrophic. “Recently, I went to a bar and I saw that you could pay for your drink with Afterpay,” she said. “I was essentially taking a micro loan to have a drink.”
It’s a sign that things have gone too far, Kaurov said. “That is one thing that I would really highlight for people to be careful.”
6. Waiting too long to start investing
When it comes to investing, “You just need to get started,” Kaurov advised.
She waited years to start investing, but said it doesn’t have to be daunting.
Kaurov said she started micro-investing — setting up automatic investments every week — and it only took about five minutes.
“Things are not as hard and scary as they look,” she said.
Kaurov added that being in your 20s really works in your favor because even small contributions, like $50 a month, add up over time.
“I always like to compare that to running a marathon. You’re never going to do it on day one.”
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