{"id":1113897,"date":"2026-07-27T09:15:29","date_gmt":"2026-07-27T09:15:29","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/1113897\/"},"modified":"2026-07-27T09:15:29","modified_gmt":"2026-07-27T09:15:29","slug":"how-gen-z-can-build-wealth-with-20-rule","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/1113897\/","title":{"rendered":"How Gen Z Can Build Wealth With 20% Rule"},"content":{"rendered":"<p><strong>&#8216;Users should protect their savings goals before allocating money to discretionary expenditure.&#8217;<\/strong><\/p>\n<p><img decoding=\"async\" class=\"imgwidth\" title=\"Gen Z Savings\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/07\/26gen-z-savings.jpg\" alt=\"Gen Z Savings\" style=\"max-width:100%;\"\/><\/p>\n<p>Kindly note that this illustration generated using ChatGPT has only been posted for representational purposes.<\/p>\n<p><strong>Key Points<\/strong><\/p>\n<ul>\n<li>Gen Z is adopting credit cards earlier, with many accumulating sizeable balances and taking additional unsecured loans within a year.<\/li>\n<li>Experts recommend limiting credit card spending to 20-30 per cent of take-home income while keeping savings at 20 per cent or more.<\/li>\n<li>Paying only the minimum due can trigger high interest costs, GST, late charges, and loss of the interest-free repayment period.<\/li>\n<li>Warning signs of overleveraging include relying on credit for essentials, paying only minimum dues, and frequently using EMI conversions.<\/li>\n<li>Building a strong credit score requires timely full repayments, low credit utilisation, and avoiding multiple loan or card applications together.<\/li>\n<\/ul>\n<p>\u00a0<\/p>\n<p class=\"rbig\">In March 2026, Gen Z consumers aged 30 or below made up half of all first-time credit card customers. Among those aged 24 to 30, 31 per cent already had at least two active credit products.<\/p>\n<p>Within three months of receiving their first card, 28 per cent had built balances of Rs 25,000 or more, while 69 per cent took on another unsecured loan within a year, according to a TransUnion CIBIL white paper. Clearly,<\/p>\n<p>Gen Z is entering the credit card market earlier and is already saddled with debt. They also build balances faster and add fresh credit sooner.<\/p>\n<p>Align spending with repayment capacity<\/p>\n<p class=\"rbig\">The sanctioned credit limit only shows the maximum amount a lender is willing to extend. It does not reflect a user&#8217;s affordability.<\/p>\n<p>&#8220;Affordable card spending should be determined by monthly cash flow after accounting for essential expenses, existing EMIs (equated monthly instalments) and other investments, and emergency savings,&#8221; says Rohit Garg, co-founder and CEO, Olyv.<\/p>\n<p class=\"rbig\">Users should protect their savings goals.<\/p>\n<p>&#8220;Savings should ideally be at least 20 per cent of take-home income,&#8221; says Saurabh Bansal, founder, Finatwork Investment Advisor, a Sebi-registered investment advisor.<\/p>\n<p>&#8220;As a thumb rule, credit card spending should be restricted to 20-30 per cent of take-home income, provided the entire balance is repaid every billing cycle,&#8221; says Garg.<\/p>\n<p>Total EMI obligations should remain below 35-40 per cent of take-home income. Users should keep overall credit utilisation below 30 per cent. &#8220;Utilisation of 10-20 per cent is preferable for a strong credit profile,&#8221; says Arun Ramamurthy, author of the book, Unlock the Power of Your Credit Score.<\/p>\n<p>Do not carry balances forward<\/p>\n<p class=\"rbig\">Paying only the minimum amount due may prevent default, but interest continues to accrue. &#8220;Annualised credit card interest rates are 36-48 per cent or higher, depending on the issuer,&#8221; says Garg. Bansal adds that goods and services tax on interest and applicable late charges can cause the debt to snowball. Users who carry a balance also lose the interest-free period on fresh purchases.<\/p>\n<p>Watch out for signs of overleveraging<\/p>\n<p class=\"rbig\">Repeatedly paying only the minimum amount due, using one credit card to repay another, relying on cards for groceries or other essentials, and feeling anxious before payment due dates are a few signs of overleveraging.<\/p>\n<p>&#8220;Frequently converting routine expenses into EMIs indicates repayment stress. Regularly crossing 30-40 per cent of the available limit may also indicate excessive credit use,&#8221; says Bansal.<\/p>\n<p>A cardholder who sees these signs should stop new discretionary spending and follow a disciplined repayment plan.<\/p>\n<p>Use EMI conversion sparingly<\/p>\n<p class=\"rbig\">Converting a purchase into EMIs can provide short-term relief. &#8220;A small outstanding amount may be converted for a short tenure of two to six months when current liquidity is inadequate,&#8221; says Harsh Grover, co-founder, LoansJagat. Issuers often offer EMI conversion without assessing the user&#8217;s income or overall financial position, which is helpful in periods of distress.<\/p>\n<p>But a user who converts a large purchase into EMIs without checking repayment capacity could create a heavy debt burden. &#8220;Younger users with relatively low incomes may be affected more severely,&#8221; says Grover. Ensure that future instalments remain affordable after accounting for other expenses.<\/p>\n<p>Factor in all costs<\/p>\n<p class=\"rbig\">Consider all the costs attached to EMI conversion. EMI interest may range from approximately 10.5 per cent to 25 per cent annually.<\/p>\n<p>Reward points earned on the purchase are generally reversed after conversion. Processing fees may range from 1 per cent to 5 per cent of the transaction amount.<\/p>\n<p>Grover suggests that users factor in all these costs before deciding to convert to an EMI. A lower-interest personal loan may preserve rewards and involve a lower processing fee.<\/p>\n<p>Strengthen credit history<\/p>\n<p class=\"rbig\">Young credit card users can build a sound credit history by paying their dues in full by the due date and keeping utilisation below 30 per cent. &#8220;Avoid applying for several cards or loans around the same time,&#8221; says Ramamurthy.<\/p>\n<p>Swipe smart, stay debt-free<\/p>\n<p class=\"rbig\">Avoid cash withdrawals, as charges apply immediately and there is no interest-free period<br \/>Do not spend merely to earn cashback or reward points<br \/>Avoid impulse purchases merely because credit is available<br \/>Treat the credit limit as a facility that provides financial flexibility, not as additional income<br \/>Understand the billing cycle and be aware of the payment due date<\/p>\n<p><strong>Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities\/schemes or any other financial products\/investment products mentioned in this article to influence the opinion or behaviour of the investors\/recipients.<\/strong><\/p>\n<p><strong>Any use of the information\/any investment and investment related decisions of the investors\/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.<\/strong><\/p>\n<p><strong>Feature Presentation: Aslam Hunani\/Rediff<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"&#8216;Users should protect their savings goals before allocating money to discretionary expenditure.&#8217; Kindly note that this illustration generated&hellip;\n","protected":false},"author":2,"featured_media":1113898,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3093],"tags":[303695,303698,303693,51,177480,474,303696,303692,6776,303694,303697,143446,2499,16,15],"class_list":["post-1113897","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-arun-ramamurthy","tag-aslam-hunani","tag-bansal","tag-business","tag-emi","tag-finance","tag-finatwork-investment-advisor","tag-garg","tag-gst","tag-harsh-grover","tag-loansjagat","tag-olyv","tag-personal-finance","tag-uk","tag-united-kingdom"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116991187661947325","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1113897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=1113897"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1113897\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/1113898"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=1113897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=1113897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=1113897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}