This Is The Single Most Important Piece Of Expert Financial Advice For Gen Z

Starting your career can be both exciting and nerve-wracking. Not only can learning the practical skills, programs, and lingo of your workplace be exhausting, but it also presents you with the chance to learn your likes and dislikes. Regardless of your educational path, you might quickly learn the practical application of your career isn't what you expected, or it could be that it's even better than you had imagined. While being an early-career 20-something can have its advantages in terms of both flexibility and having the time to make or change your mind, there are also unique financial opportunities, especially for those planning ahead.

While there's an over-abundance of advice, tips, and tricks out there for how to manage financials, certain advice has more impact for younger age groups than others. This is largely due to the fact that young people, like Generation Z, simply have more time to implement long-term financial plans than older generations do. Plus, as new residents of the workforce, there's no better time to create, manage, and hone financial habits that can serve your career for decades to come. While saving for a far-off future isn't exactly the most exciting way to spend your new paychecks (and many Gen Z and millennials suffer from money-phobia because of this) it can be important to consider. As Lawrence Sprung, CFP, author of "Financial Planning Made Personal," and Founder of Mitlin Financial, told us, "The single most important piece of financial advice is to pay yourself first."

"Just like how they tell you on a plane to put your oxygen mask on first, taking care of yourself financially first should be [the] priority," explained Lawrence Sprung. Paying yourself first generally means putting a portion of your take-home income directly into some form of savings (preferably a high-yield savings account that outpaces inflation) before you have the chance to spend it.

While it can be easy to fall into the trap of spending any extra money on fun things in the moment, prioritizing savings first can be extremely beneficial, especially long term. Also, remember that, with the current rate of inflation, it can be important to ensure you aren't saving your money in a standard savings account. Maintaining your buying power is important when it comes to saving money over long periods of time so make sure to investigate the interest rates on your account and/or consider a bank offering competitive high-yield accounts.

Note that paying yourself first could mean creating automatic routing contributions directly into a retirement account (and thereby bypassing savings accounts altogether). This could be either a more traditional 401(k) through work or even a private Roth IRA style account. By having these automatic deductions set up, you can help remove any temptation to spend money earmarked for savings. Yet, remember that money in a retirement account is usually not accessible without tax consequences so don't forget to keep an easily accessible emergency fund in addition to any retirement savings you might be budgeting for.

Beyond the general importance of saving, Lawrence Sprung also shared another important financial concept, "Starting early in life creates a habit and will also allow you to utilize the eighth wonder of the world, compound interest." To put it simply, compound interest is both the interest calculated on your initial principal (i.e., income you contribute) as well as all previously accumulated interest (we even have a ranking of 12 of the best compound interest investments). Essentially, it means you earn interest on interest. Obviously, the more compounding periods your money goes through, the larger the effect of the compounding, which is why starting your savings and/or retirement at a young age, like in your 20s, can have significant financial benefits long term.

There are many different ways to calculate compound interest depending on our specific terms, but the main thing to keep in mind is how your specific account attributes compounding periods. These periods can range from annually to daily so make sure you do research on whatever account type you are considering before committing. Compounding interest can be available on savings accounts and money market accounts, certificates of deposits, bonds, or even as part of other investments. It's also important to keep in mind that compound interest can similarly work against you, especially when it comes to loans and/or credit card debt. Just as compounding can increase your savings exponentially, it can also push you into a debt cycle when it comes to credit cards (which often have high interest rates).