By Naomi Livingston
Why does your Baby Boomer mother not want to discuss finances with you? Why is your Gen Z niece always following the latest social media budgeting trend? And why does your Millennial cousin complain when a store is cash only?
There is no doubt that each generation has very different outlooks when it comes to their personal finances. But, from Baby Boomers to Gen Z, there are ways we can all try to understand ourselves and our peers better!
(If you’re curious about the distinctions of each generation, check out Exploring Generations Part 1. Or, if you want to learn how each generation trends in the workplace, read Exploring Generations Part 2.)
According to the World Economic Forum, in 2021, the average American spent just over $60,000 a year. The differences in habits between age groups may surprise you. This article will explore how these generations view and treat their finances, whether they are savers, spenders, or anything in between.
Baby Boomers (1946–64)
While most Baby Boomers were born after the World Wars and the Great Depression, they often carry a sense of scarcity and frugality that was likely passed to them in their childhoods, as well as remember some periods of economic uncertainty throughout their own lives.
Baby Boomers tend to love deals and value a conservative budget. They are much less likely to overspend than other generations, but also tend to save much more than they realistically need to. However, for some Boomers, the result has been the opposite, where the frugality of their upbringing has encouraged them to live more materialistically with the money they have now (Spero Financial).
“The typical Boomer might feel uncomfortable discussing salaries and retirement savings—when they were growing up, talking about money wasn’t something grown-ups usually did,” says NCR Alteos. Money is typically a quiet topic – rarely being shared with friends and family, although usually it does feel important internally.
Gen X (1965–80)
Gen X currently spends the most money per year in the US, averaging $83,357 per year in 2021 (Clear Voice). A possible contributing factor to this could be that they are in an age group where many financially support either their aging parents or children.
That said, they still tend to be calculated and careful in their purchases, looking for practicality and durability over trends or flashiness. First Merchant’s Bank states that Gen X was the first generation to enter the workforce with a 401k plans, and is the group with the largest retirement savings.
While some in the Gen X generation have been careful planners and prepared for retirement, many still utilize debt and are “struggling to meet their retirement goals” (First Merchant’s Bank).
Millennial/Gen Y (1981–96)
The second biggest spenders of recent years, Millennials, have adopted a different approach towards money. Instead of focusing on things like practicality and durability, Millennials often value things that are convenient to acquire and socially conscious brands (First Merchant’s Bank).
Millennials have changed how money is spent, favoring mainly digital wallets and online shopping. They often prefer experiences rather than having a lot of possessions. And, NCR Alteos says, “While Millennials have a reputation for being big spenders, they’re actually saving for emergencies and retirement at higher rates than other generations.”
Millennials are much more open about money, even comparing salaries and discussing financial wisdom and advice with friends. With so much research at their fingertips, they tend to prioritize research when making big financial decisions.
Gen Z (1997–2012)
Gen Z, perhaps surprisingly, has already started saving and investing early. So far, they are not big spenders, but this, of course, could change as most are still very young in their careers. Their saving habits could be partially due to the fact that they will need significantly more money to retire than their predecessors, according to First Merchants Bank.
Gen Z tends to be very open about their finances, talking about them on social media and sharing ideas with others, even through following trends like “Loud Budgeting” or “Underconsumption”. Perhaps hearing peers and influencers discuss money so openly has been a positive for this generation in encouraging them to save and take an interest in personal finances.
ABOUT THE AUTHOR
Naomi lives in Pittsburgh, PA but her roots are from a little Christmas tree farm in upstate New York. She works in marketing for Greater Europe Mission, an international nonprofit organization. She’s always finding ways to make room in her budget for traveling and reads over 100 books each year.
