The recent recession has certainly left its mark on both the economy and on the spending and saving habits of everyone, regardless of generation. With 69 percent of people claiming that they are spending less and 67 percent using coupons, the population in general is trying hard to remedy its money habits. However, certain generations appear to have better luck at this than others.
The Baby Boomer generation, consisting of those born in between 1945 and 1966, is generally expected to be good at saving. After all, their parents lived through the Great Depression, and many expected that hearing about this would cause them to be more careful with their money. However, this expectation isn’t necessarily reality; due in part to job losses in the recent recession and the high costs of saving for their children’s educations, many Baby Boomers are finding their retirement savings coming up short.
Generations X and Y, on the other hand, have an interesting advantage over their Baby Boomer counterparts when it comes to saving and investing: the power of technology. Although 41 percent of Generation X has under $100,000 saved for retirement, there is a large part of Generation X that appears to be doing just fine, especially given their use of technology in order to improve their investing decisions. An index was recently released showing that financial advisors who identified as technologically adept and served mostly those in their 30s and 40s produced roughly $8 million more in returns than other advisors.
To the surprise of many, Generation Y comes in as “the cheapest generation.” Although this generation does tend to fall into the trap of relying too heavily on easily available lines of credit, they are also hesitant to make big purchases. This is demonstrated by the lower percentage of Generation Y that own cars or homes. Renting an apartment is a popular option for Generation Y, and innovations like Zipcar, where you can rent a car for a few hours at a time, make owning a car less of a necessity.
Only time will tell whether Generation Z will follow in the footsteps of Generation Y and spend thriftily. However, after living through what many have dubbed “the Great Recession,” it is expected that Generation Z’s attitudes toward money will be more cautious than the attitudes displayed by previous generations.
Edited by Rachel Ramsey