The generation we’re born into shapes more than our habits. It influences how we think about money, what we value, and even what we consider worth saving. If a generation is a group of people who grew up around the same time and were shaped by many of the same historical and social experiences, here are trends in how different generations handle money.
Gen Z
Born between 1997 and 2012, Gen Z believes financial health directly impacts mental and physical health. They’re even willing to work “side hustles” to diversify revenue sources to improve financial well-being, the first generation influenced by peer recommendations and social media when making financial decisions.
• Saving: You value responsible spending habits that reflect your lifestyle and values, prioritizing affordability with some allowance for spending on experiences and self-care.
• Investing: You’re investing at a younger age compared to previous generations, with many starting in the late teens or early 20s. You embrace new investment avenues and technologies but also prioritize ethical and sustainable investments.
• Spending: While more practical than older generations, you, too, value spending on experiences but do so with a value-driven mindset (making more mindful cost-conscious purchases to offset a splurge). In what’s called “loud budgeting,” you’re not embarrassed to share spending budgets with friends to help stay within your means.
Formative experiences: COVID, Great Recession, gun/school violence, smartphones
Millennials
Born between 1981 and 1996, millennials are more value-oriented than previous generations and view money to further social issues, like sustainability and human rights. They’re also motivated to achieve financial stability, having witnessed their parents struggle financially, but are more distrustful of financial institutions, with many starting their first jobs during the Great Recession.
• Saving: You started saving earlier than other generations. While over half are saving, you’ll dip into it for travel.
• Investing: While you’re steadily paying off “the past,” including hefty college loans, you’re also saving for the future. About 64 percent of you are invested, favoring cryptocurrency (38 percent) and stocks (37 percent).
• Spending: You want to enrich life now versus waiting until you’ve built an adequate nest egg. You also value experiences and flexibility, and are less focused on traditional wealth accumulation and more on designing a life that feels rich in every way.
Formative experiences: 9/11, computers/tech, rise of social media, school violence
Gen X
Born between 1965 and 1980, this generation was among the first to use debit cards, ATMs, and cell phones, and the first to largely “self-manage” retirement through 401(k) plans. Increasingly, Gen X is supporting both aging parents and children. Thus, they tend to view money and future security with a degree of stress. Only about 14 percent of Gen Xers felt they had saved enough for retirement.
• Saving: Careful savers in favor of long-term financial security, including retirement planning.
• Investing: You tend to favor low-risk investments, such as real estate and more conservative portfolios.
• Spending: Doesn’t like to hold debt and strives to repay through aggressive strategies, like higher payments.
Formative experiences: Watergate, the energy crisis, fall of the Berlin Wall, rise of the personal computer
Baby Boomers
Between 61 and 79 years old, boomers are increasingly holding on to their money to compensate for increased living costs and to plan for healthcare and care needs. High net worth boomers say they would prefer to use their money on themselves rather than share it with their children now or leave behind an inheritance when they die.
• Saving: Make savings a priority and invest conservatively. Many of you have a “pay-with-cash” mentality.
• Investing: The largest portion of your wealth lies in stocks and bonds. The next is from owning real estate.
• Spending: You favor health-conscious spending on products and services that keep you feeling well and moving. While known for hard work and ability to save, you’ll spend on nonessentials that enhance your lifestyle, like travel.
Formative experiences: Kennedy assassination, the Civil Rights Movement, Vietnam War, Beatles, Elvis
Lindsey D. Rhea, CFP, is owner and wealth strategist at Alia Wealth Partners, connect@aliawealth.com.
