A Different Financial World – Generation X and Millennials

We know each generation is unique, and that doesn’t change when it comes to money management. Technology changes, the economy changes and attitudes change. It makes sense, then, that Generation X (ages 35-50) and Millennials (ages 18-34) sometimes think differently about finances. Here are some trends we’ve seen with these two younger generations.

Hands Off

These two generations that are strapped for time usually take a hands-off approach to managing their money. Frequently their bills come in electronic format and are automatically withdrawn from their bank accounts, often without the aid of budgeting or examining the success (or failure) of their monthly budgets. Both of these generations were affected by the economic crisis that began around 2008 and are wary of people in the financial industry, so helping them with advice can be tricky. It’s important for advisors to be transparent with them so that they will accept the help they need.

Debt vs. Savings

Generation X is an often forgotten segment of the population when it comes to getting financial advice. Baby Boomers are nearing and in retirement, so they are in more imminent need of financial management during those years. Both Gen-Xers and Millennials stand to inherit money from Baby Boomer parents, so they will need help investing that money. Both of these younger generations typically have high debt, in particular, student loans. But, according to a survey by Northwestern Mutual, Generation X is the most likely to have poor financial habits.

Generation Xers typically have more debt than savings, even though many of them are in their peak earning years. They’ve grown up during decades when getting a credit card and a mortgage was easier. They might have excessive student debt, especially if they were first generation college students whose families did not believe college was a necessity. As a result, they may not have enough savings to pay for their children’s college, may have purchased homes outside of their budgets, might have too many revolving lines of credit, could have co-signed loans for adult children and have other issues that have stretched them too thin financially.

Millennials as a group tend to have better savings habits. They also tend to have college degrees and good earning potential, even though they have not yet reached their peak earning years. They stand to inherit money from their parents and will need advice on how to invest. They may not have a good grasp on investing and will likely need guidance. That’s the good news. The bad news is, given that a college education is almost a necessity in earning a living wage, Millennials tend to have student debt, especially if their parents are already in debt. The rising cost of postsecondary education has taken a toll on this generation, in spite of their desire to save.


Both of these groups could benefit from advising in different aspects of their financial lives. Generation X has typically seen some long-term investing results from the stock market prior to the financial crisis, so they tend to be less afraid to invest, while Millennials may have been entering the workforce just as the bubble burst. This causes Millennials to be wary of investments, as their experience relates more to the shorter term. They need financial advice to help guide them as they invest their inheritance and wealth they have earned. Generation X will likely need the most help in whittling down debt, ramping up savings in preparation for retirement and making sound financial decisions. Both groups could benefit from advice on how much they can afford to spend on a house, how to invest their savings and how to best prepare for retirement.

How Older Generations Can Help

The best thing parents and grandparents of Gen Xers and Millennials can do is guide the younger generations toward getting the kind of advice they will need to make sound decisions. Gen Xers and Millennials can also start early in educating their children about finances.

Find a trusted financial advisor to recommend and, if appropriate, offer to sit in on informational sessions. No matter how old they are now, members of the younger generations might appreciate the insight you bring to the table.

Wood Smith Advisors, a Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

“Finance Made Simple” blog posts are intended for educational purposes and not for specific advice.  Each person’s situation is different.  Consult your financial advisor for advice relating to topics discussed.

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