Overview:

Each generation has its unique approach to finances, shaped by their life experiences, economic conditions, and values. Baby Boomers prioritize secure retirement savings, Gen X values self-sufficiency and investing, millennials are burdened with debt and delayed financial milestones, and Gen Z embraces digital finance, prioritizes savings, and is wary of debt. Understanding these generational financial tendencies can help individuals learn from each other's strengths and approach their financial goals in new ways.

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Today’s economic environment is shaped as much by prices and policies as it is by personalities. With four different generations working, saving, and spending at the same time, their different approaches to finances can help us see why money can highlight generational gaps.

It’s essential to keep in mind that every person is an individual, and the time period you were born does not necessarily mean you adhere to the same financial principles as others born during the same period. However, surveys show that generations do tend to have some overarching financial tendencies. And exploring those similar themes among generations affords us an opportunity to learn from each other’s strengths.

Baby Boomers

Born 1946-1964

For the first time ever, many people are working past the age of retirement. Almost half of Baby Boomers expect to be working after age 70, either from necessity or personal desire. With secure retirement accounts in most cases, Boomers are working to improve their individual quality of life and amass more generational wealth.

Financial Worldview

Baby Boomers came of age when the economy was booming after World War II. They generally had reliable work opportunities and could expect retirement savings. Boomers grew up using cash and savings accounts, where you could easily see every dollar you owned. Saving for luxury items is a point of pride. They are careful with their money but have an abundance mindset.

Financial Traits

  • Secure retirement accounts
  • Prefer to save for purchases rather than use credit
  • Trust traditional investments and financial advice
  • Want to amass generational wealth

Strengths to Learn From

  • Planning for big-ticket purchases
  • Steady, measured financial goals

Gen X

Born 1965-1980

Parents who had stable careers and financial plans raised Generation X, but they didn’t always find the same predictability in their own adult years. Gen X workers tend to be entrepreneurial in both their careers and personal savings plans. They are often working to support traditional goals like personal success and family stability.

Financial Worldview

Generation X experienced uncertainty in the financial world during their adolescence and early adult years. They met traditional milestones, such as home ownership, but saw market crashes and inflation alongside extensive credit card use. They expect retirement savings, but don’t entirely trust that the economy will be stable. Owning luxury items is a sign of success and hard work. They tend to have a scarcity mindset and value self-sufficiency in the face of uncertainty.

Financial Traits

Strengths to Learn From

  • Willingness to explore non-traditional financial options
  • Making long-term goals and related planning

Photo: peopleimages12 via 123RF

Millennials

Born 1981-1996

Some estimates show that millennials will make up 75% of the workforce this year. Saddled with student loan debt and struggling to catch up to ever-increasing prices, millennials typically work more than one job. They are competitive and value hard work, but they require respect from employers and are not loyal on principle. Millennials expect to be paying off debt and simultaneously saving for the future at high rates. 

Financial Worldview

Millennials navigated the transition from pre- to post-digital globalization. They grew up using cash, but now fully embrace cryptocurrency and digital platforms. They were raised during a time of prosperity and told to follow traditional dreams alongside an expensive college education. Their early adult years pushed back against this optimism, though, with the 2008 recession. Millennials are the first generation to not expect traditional retirement savings and also the first generation to be saddled with massive student loan debt. Alongside inflated prices for basic financial milestones (like home ownership), millennials have turned to side jobs to meet the financial expectations they heard in childhood.

Financial Traits

  • Highest burden of debt, substantially due to student loans
  • Delayed financial “milestones” such as home ownership
  • Willing to spend on experiences over items
  • Side hustle culture to build retirement savings

Strengths to Learn From

  • Breaking from traditional measures of success when goals don’t align
  • Spending money on experiences for personal pleasure rather than outward success

Gen Z

Born 1997-2012

Generation Z is the newest group to be fully immersed in the workforce and economy. As digital natives, they embrace opportunities to work and invest in creative ways. They do not view student debt as a worthy sacrifice, and they expect employers to subsidize their training.

Financial Worldview

Generation Z was the first to grow up in a fully digital world. They are comfortable navigating quickly changing careers, expectations, and investment opportunities. They saw their parents and older Millennial peers struggle with unstable economic ups and downs, so they don’t expect financial stability from the traditional system. They are very civic-minded and use their money to support worthy causes more than personal needs. However, saving for their future is a top priority, and they take that responsibility on independently rather than through institutions.

Financial Traits

  • Are wary of debt and prioritize savings
  • Do not count on pensions or social security, and prefer to invest early in private retirement accounts
  • View jobs as flexible and expect to change careers multiple times
  • Use spending to support causes and values

Strengths to Learn From

  • Purposeful spending to support community values
  • Approaching financial goals as a continuum rather than specific steps

Ultimately, generational approaches to finances are a fun concept to explore, but remember: Everyone is an individual with their own unique approach to finances. Highlighting shared experiences can shape financial attitudes in interesting and even surprising ways, and understanding them can help us better appreciate each other’s strengths and learn new approaches to managing our money.