Intergenerational Spending and Money Management: Baby Boomers, Generation X, and Millennials
Aging brings upon new experiences and habits which affect spending and saving habits. In general, the older one gets the more they will learn from their mistakes and improve. Lifelong learning is key to financial success and the challenges associated with growing older, such as attending university, building a family, or even old age itself often impact decisions on spending and saving.
Baby Boomers:
Healthcare and Retirement
Baby Boomers (1946–1964) are the oldest of the three generations to be compared. With a median age of 65, most Boomers are at, or nearing, retirement age. Despite this, Baby Boomers are notorious for not having saved for retirement or even having a retirement plan. Stanford’s Center on Longevity conducted a study that found that 1 in 3 Baby Boomers had no savings for retirement with the average being only 10% of their pay towards retirement funds. The effects of Baby Boomers also caused the average Medicare and Medicaid costs to double, which many people are struggling to afford.
Shopping
Regardless of their age, Boomers make up for 40% of card-not-present purchases on Visa; in 2018 a Deloitte holiday report results showed 53% of Boomers preferred online shopping over physical stores. The same report also found that 59% of Baby Boomers would pay extra for sustainable products.
Debt
Stanford’s Center on Longevity also determined that of households with debt, Boomers had over $110,000 in debt. Of this debt, they had an average of around $33,000 in student loans and $7000 in credit card debt.
Generation X:
Spending:
Generation X, ranging from those 40 to 55 years old, are Millennials at heart. Spending an average of $4,229 annually eating out, just behind the Millennials, 66% of Gen X’ers said they would eat at the “hot” restaurant in town, with 40% of Gen X’ers willing to spend over $4 for a cup of coffee. The Bureau of Labor Statistics states that Generation X spends 33% more than Millennials.
Hybridization:
Despite being the smallest generation compared with only 65 million people in the US, Generation X makes up for 31% of the US’s total income. Generation X falls between Millennials and Baby Boomers which means they have characteristics of Boomers and the buying habits of Millennials. It has been shown that 95% of Gen X’ers have a Facebook account and 72% of them use the internet to do research on business and stores. Many of them are ignored by marketing campaigns and overlooked as a generation.
Saving:
Similar to Boomers, Gen X’ers in general do not have a consistent retirement plan or retirement funds. Despite this, they still love to use coupons and search for them on websites like Groupon. Compared to their neighboring generations however, they save the most in their pensions, at an average $14,000.
Millennials:
Debt:
Being the youngest generation (25–40 years old), Millennials spend the most of their income, but they also have the lowest income. The Great Recession held back 15% of the middle-older aged Millennials in their financial progress as they were left unemployed for years. This, bridled with their ever-increasing student loans caused many to be behind on their saving schedule, and made 39% expect to work past retirement. The 2017 Generational Report from Financial Finesse showed that Millennials owe $1.1 trillion of the country’s $3.6 trillion in consumer debt, and that 75% of Millennials are in debt.
Spending:
Social media has influenced how Millennials spend their money because it allows them to display their accomplishments for hundreds, thousands, or even millions of people to see. Younger Millennials are more likely to shop in a brick and mortar store rather than their older counterparts. The majority of Millennial purchases rely on word of mouth, whether it be through friends or social media. In the same way that Gen X’ers use the internet to research businesses, Millennials use social media to guide them on purchases.
Saving:
Millennials are the most likely to begin saving for retirement at an early age, with 75% claiming it to be their primary concern. Millennials also aim to save for a house and a car in preparation for building a family and/or settling down. Though a majority of Millennials save money in some way, 27% have no savings at all. The average Millennial does not have much saved as a result of high costs of living and student loan debt. As a result, 75% of Millennials make a budget and stick to it to save more of their money.
