How different generations manage money is an ever-changing topic. From saving to spending, each generation has different money habits. Do you think the way you spend money now is the same way your parents spent money when they were younger? Chances are, it’s not. Have your spending habits changed over time? Chances are, yes.
This article will look at how different generations manage their finances. Sharing valuable insights into how views about money change not just between generations, but over a lifetime.
Generation Z: The Digital Natives
It seems like Generation Z is the latest group to make waves with their unique approach to finances. Sometimes called digital natives, the next generation of consumers are tech savvy. A survey of 1,300 Gen Zers said that they use at least one app for budgeting, investing, or everyday banking. This shows how this techie demographic group can manage money comfortably online. In addition, they rely on technological tools to assess their financial performance.
Gen Z also believes in impact investing. Putting more emphasis on investing in the companies and causes they believe in. For instance, you might invest in a renewable energy company because you believe in helping the environment. This is a popular way to invest for young people who want to make a difference with their money.
Millennials: DIY Finances
Millennials are more likely to invest in things themselves, unlike older generations. In addition, millennials spend more on experiences than other generations.
Millennials are comfortable using technology to research and manage their finances. They like to have instant access to information and the ability to customize their experiences. This is harder to do with traditional financial products or through a financial advisor. DIY investing is popular among the Millenial generation because it allows them to see exactly where their money is going, why it’s going there, and be able to adjust if necessary.
Millennials tend to have complicated personal finances. Many struggle with credit card and student loan debt, among other economic constraints. They’re trying to balance saving for retirement while also looking to buy a home and start a family. As a result, millennials tend to invest shorter-term in stocks or mutual funds.
Gen Xers: Manage Money Intelligently
Gen Xers are more focused on saving for retirement than their millennial counterparts. They lean towards being careful with their money, preferring to avoid risky investments.
Buying a home is another key financial goal for many Gen Xers. This generation is more likely to wait until they can afford their dream home. They don’t want to settle for something less. Which, with their value of being smart about money, makes sense.
Finally, Gen Xers are more likely to seek help from a financial advisor. Part of making smart decisions is being informed. That’s why they rely on getting input from professionals before moving forward.
Baby boomers: Protect wealth in retirement
As baby boomers approach retirement, they are facing unique financial challenges. Many haven’t had the benefit of financial instruction so they’re less prepared for retirement. This lack of access to financial knowledge has led many baby boomers to make poor financial decisions. Unfortunately, their nest eggs are suffering the consequences.
The baby boomer generation tends to be more conservative when it comes to taking financial risks. A strong desire for financial security means they like to spend money on things like real estate and medical insurance. These investments are usually perceived as necessary, low-risk investments.
As a result, baby boomers need to be especially careful when planning for retirement. They should think about what could happen if they lose their job or have to move. They need to know how much their annual spending is. By doing so, they can ensure they will be able to enjoy a comfortable retirement.
Final thoughts
Each generation has a different approach to spending, investing and managing money in general. Gen Xers and baby boomers vary in their spending and saving money habits even though they’re close in age. The same goes for millennials and Gen Zers. This is because each generation has unique implications when it comes to finances. However, each generation can learn from one another when it comes to perfecting a financial approach.
Each generation has strengths and weaknesses when it comes to how they manage money. If you’ve found yourself in hard times our Credit Counsellors can help. Reach out to us to get started.
