Saving vs. Investing for Gen Z: Which Strategy is Right for You?

When it comes to managing your money, there’s a time for everything.

There’s a time to spend, a time to invest, and a time to save.

And yet, three important questions remain:

  • What financial season are you in today?
  • What financial goals are you pursuing for tomorrow?
  • And which strategy is best for right now: saving investing?

If you’re under the age of 35, it can seem impossible to answer those questions with confidence.

But here’s the good news: investing and saving strategies are always helpful, no matter your age, career, or socioeconomic level.

And while the stock market can provide powerful long-term gains, short-term savings strategies are especially valuable to Millennials and Gen Z. Today, we have divided our article into three main parts. After a brief article summary and a short explanation of “saving vs. investing,” part one will cover when to save. Part two will cover when to invest. And finally, part three will cover how to save.

Let’s dive in.

Key Article Takeaways

In a rush? Here’s the article summary:

  • If you need cash in the near term, prioritize saving over investing.
  • Set a budget, tackle debts, and establish an emergency fund before buying stocks.
  • If your employer offers a 401(k) match, take full advantage of it.
  • Choose a digital banking partner that offers no hidden fees, cashback, and other amazing rewards.

Saving vs. Investing Explained

Though the terms are used interchangeably, saving and investing are two different strategies.

When you save, you store your money in a bank account with relatively low returns and equally low (if nonexistent) levels of risk. In other words, your money is considered both saved and safe.

By contrast, investing exposes you to higher levels of risk with a potential for outsized returns. That’s true whether you invest in the stock market, in cryptocurrency, in real estate, or in any other alternative investment.

Though saving and investing are fundamentally different, they’re still united in one key area – they’re both strategies that can help you accumulate money over an extended period of time.

Deciding on one, the other (or both) will depend on your unique financial situation.

Part 1: When to Invest

Investing is a long-term game consistently marked by volatility.

For most Americans, investing isn’t about turning a short-term profit. It’s about building savings to enjoy throughout retirement.

Historically, the stock market averages a return of over ten percent, and it consistently beats inflation by about seven percent. In 2022, where commodity prices are surging and the dollar’s purchasing power is declining, investing may seem like an attractive option for your discretionary income.

But hang on! Before you put your money in the market, it’s smart to keep a few things in mind.

For starters, the stock market is highly volatile and losses are inevitable. While 2020 and 2021 were great years for investors, 2022 is widely considered “one of the worst starts” in recent history. This historic sell-off may provide an ideal entry point for long-term investors, which some analysts are calling a “generational buying opportunity.

Example Time: Investing

Let’s say you’re 32 years old, and you invested $100 in a popular tech company through your Individual Retirement Account (IRA). A year goes by, and the stock climbs to $150, at which point you decide to cash out.

The problem is, you’re only 33. If you withdraw money from your IRA before the age of 59 1/2, two things will happen:

Even though you made $50 on your initial $100 investment, you’ll end up paying at least $30 in taxes, thereby reducing your total capital gains to a mere $20. In places like New York City or Los Angeles, you’ll be lucky if one $20 bill can buy you a nice sandwich and a fountain drink.

Note: This example is not intended to discourage you from investing. Instead, it’s meant to highlight the risks of investing to reap a short-term profit.

When it comes to investing, time is your best friend. After all, time is what unleashes the power of compound interest — what Albert Einstein famously dubbed “the eighth wonder of the world.”

For a second example, let’s say you invested $10,000 in your IRA at an annual return rate of ten percent.

If you added an additional $1,000 each month for the next twenty years, your starting amount of $10,000 would be worth over $785,000 by the year 2042.

That’s not sorcery – it’s compound interest.

In order to capitalize on compound interest, you need to have significant sums of cash to invest. And you also need the time and patience necessary to let your investments grow in spite of disturbing periods of volatility.

If you’re not yet in a place where investing seems feasible, that’s okay. In many cases, it may be more strategic to use your available cash for:

  • Building up your emergency fund.
  • Paying down high-interest debt.
  • Investing in yourself and your marketable skill set.

Savings strategies can help you achieve these goals, replenish your financial reserves, and reach a place where you can invest with confidence.

Part 2: When to Save

It’s always a good time to save, no matter who you are or where you are in life’s journey.

Still, there are some moments in life where saving money is especially vital. Such moments can include saving to make a down payment on a house, cover an annual car insurance premium, make a dent in your student loan balance, or pay down a major medical bill. Such expenses require having cash on hand, safely secured in a savings account.

Beyond targeted purchases alone, savings can help you prepare for unexpected costs. That’s why having three-to-six months of emergency savings is so important, as the pandemic painfully revealed.

Though the desire to live a “carpe diem” life is to be commended, this outlook seems to equate “savings” with a “boring” lifestyle.

Frankly, it doesn’t need to be that way. Delayed gratification shouldn’t mean finance should be joyless. Quite the contrary! With the advent of digital banking, you can finally get rewarded for saving (i.e., interest), spending (i.e., cashback), and doing everything in-between as you sleep well at night knowing that your money is safe and secure.

Part 3: How to Save

Here are some actionable strategies to start saving with style:

  • Build a budget: Ah yes, the dreaded “B” word. While budgeting strikes fear in the hearts of many, we encourage you to view it instead as an opportunity to restructure your financial life.Need help getting started? Try the 50/30/20 budget, where 50 percent of your spending goes to your “needs” (like your housing and food costs), 30 percent covers your “wants” (like that new jacket, or tickets to a baseball game), and 20 percent goes straight to the bank.
  • Invest in yourself: Why buy shares in another company when you can use the money to invest in yourself, your business (if you’re an entrepreneur), your career, and your marketable skills in general.As your business acumen and value increase, so will your income (and savings).
  • Establish an emergency fund: Rainy days are unavoidable, but an emergency fund can help your finances stay dry.Whether you try to save up for one week of expenses, one month, or an entire year, know that every dollar saved will come in handy down the line.
  • Tackle outstanding debts: Legendary entrepreneur Mark Cuban was once asked for his best investment advice by a young shareholder.As he told the boy, “[Pay] off whatever debt you have.” Indeed, nothing erodes savings like debt, whether it derives from student loans, auto loans, credit cards, or all of the above. As Cuban advised, “If you pay off that [7 percent] loan, you’re making 7 percent. That’s your immediate return, which is a lot safer than trying to pick a stock.

Put Fun Into Finance With Flyp

Are you feeling the pinch? Give Flyp a try!

At Flyp, we offer a debit card with an amazing rewards program where you can earn up to 110% cash back!

That could be a tank of gas, or even a rent payment. Every penny counts in this environment. We also offer you a robust Knowledge Center to learn other ways you take command of your financial life.

Ready to download the app? Click below to get started.

Flyp is not a bank. Banking services are provided by Sutton Bank, member FDIC. The Flyp Classic Debit Card is issued by Sutton Bank, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa, U.S.A. Inc. All other trademarks and service marks belong to their respective owners. Read the Flyp Rewards Official Terms before participating. No account opening or payment is necessary to enter or win. See Terms for ways to enter.

Let’s Go!


Thune, Kent. “What Is The Average Return Of The Stock Market?” Seeking Alpha. April 22, 2022, Seeking Alpha.

Klebnikov, Sergei. “S&P 500 Hits New 2022 Low As ‘Staggering’ Market Losses Continue.” Forbes. May 12, 2022, Forbes.

Schleckser, Jim. “Why Einstein Considered Compound Interest the Most Powerful Force in the Universe.” Inc.,

Kaplan, Juliana. “Some Millennials and Gen Z have hit an ‘apocalyptic’ phase in which they don’t see the point in saving for the future.” Insider. May 16, 2022, Insider.

Min, Sarah. “Historic tech sell-off is a ‘generational buying opportunity’ for the ‘right’ stocks, says analyst Dan Ives.” CNBC. May 13, 2022, CNBC.

Elkins, Kathleen. “Warren Buffett and Mark Cuban agree: Avoid debt at all costs.” CNBC. May 10, 2018, CNBC.