A Comparison of Financial Attitudes and Health between Generational Groups
Consider each stage of your life and examine how your attitude towards money and your financial health has evolved. This exercise can bring many experiences to the surface from various stages of your life, which likely have influenced how you got to where you are today. Many of us are still working towards our financial goals and could be facing certain concerns and obstacles. In the following article, we’ll review some of the challenges that different generational groups may be experiencing, along with some tips to overcome those obstacles.
Baby Boomers (born 1946-1964)
Financial Focus: Generating Enough Income to Live Comfortably | Confidence in Reaching Financial Goal: 26%1
Baby Boomers are in a state of transition. They are nearing the end of their careers and approaching retirement. Unfortunately for Boomers, there are a few risks that may be affecting their financial health. In addition to their own financial responsibilities, many in this group are experiencing increasing demands on their financial resources from their parents and adult children. They must also consider economic and sociological trends, which can alter their expectations for retirement, including rising health care costs, disappearing pensions and uncertainty regarding Social Security.2 Because of these threatening trends and their shorter time horizon, this generation is especially challenged in terms of meeting their goals. However, not all is lost for this generation, as members may still have the ability to adjust their financial outlook. If you are in this generation and find yourself in this situation, you may consider a few strategies like downsizing your home, making small adjustments to yearly expenses or reassessing your retirement goals and needs.
Generation X (born 1965-1979)
Financial Focus: Reducing Debt | Confidence in Reaching Financial Goal: 34%3
Generation X is threatened by the same trends as the Baby Boomers, including the 2007-2010 recession, which coincided with their peak earning years. They are supporting their “Millennial” children, and half of the generation is having difficulty meeting their expenses each month.4 Fortunately, members of Gen X have even more time than the Baby Boomers to change their situation. If you are in this group, you may consider using your earnings to pay off debt, establish an emergency fund, and putting more money aside for your retirement on a monthly basis.
Millennials/Generation Y (born 1980-2000)
Financial Focus: Living within Their Means | Confidence in Reaching Financial Goal: 475
Millennials are commonly saddled with debt and mostly living at home with their parents. Twenty-eight percent said their priority is to manage income/expenses to live within their means and just 36% are setting money aside for their financial future.6 Luckily, Millennials have more time to plan for their future. What this younger group may not realize is that they need to start planning now, in order to take full advantage of the time they have to grow their wealth. Gen Y—every little bit counts. Take a look at our blog post, 12 Steps to Financial Fitness, for more tips.
Tips for Better Financial Health
No matter what generation you are in, there are a few keys to success that can help you reach your financial goals:
- Don’t live beyond your means. Obtain financial wisdom from the Richest Man in Babylon.
- Create an emergency fund for the unexpected and invest in your future.
- Commit to saving for retirement.
- Decide on a financial plan and a diversified portfolio that aligns with your goals and risk tolerance. Learn how to get fit financially and physically.