For nearly a decade now, Millennials have been at the receiving end of shame and insults, ranging from being irresponsible to being blamed for dest the economy. But is it truly fair to criticise younger generations for being frivolous, especially considering that the older generations have too been labelled the same by their predecessors?
Naturally, every generation is bound to have a different collective attitude towards money and money management than the previous generation, as a result of major socio-political, economic, and personal circumstances during their formative years.
All that being said, is there only one “right” attitude and method when it comes to money management? Is one generation truly more financially-savvy than the other?
Let’s examine each generation’s financial habits and discover more.
Gen X: The Slow & Steady Game
Generation X refers to those born between the years 1965 to 1979. This generation is currently in their 40s and 50s, and a large majority of them are parents with children in their teens to late twenties.
After watching their Baby Boomer parents grow up in post-depression and war times, Gen X was focused overall on attaining security (financially-speaking and otherwise), with a desire to own possessions such as homes and cars. The
Most Gen Xers do own at least one vehicle and also a house. The older ones of this generation are getting closer to retirement and are, therefore, concerned about saving for their retirement.
Gen X possessed a huge drive for securing stable and well-paying jobs. They aspired to build a better future for themselves and their children and were usually tend to be loyal to the jobs they have. It was also comparatively easier for Gen X to find a jobs with basic degrees, and education was much cheaper during their time; therefore, most of them were not burdened with significant any student loans to repay when they entered the workforce.
On the money management aspect, Gen X was concerned more about saving for the future as compared to Millennials Whether it was for education, marriage, retirement or their children’s education and marriage, Gen X never seemed to run out of reasons for saving. This is evident from the fact that while 80% of Millennials have less than INR 25,000 saved for an emergency, more than 50% of Gen Xers have saved at least INR 50,000 or more. Their preferred method for saving is mostly fixed deposits and provident funds, choosing safer options that offered modest returns at low-risk.
Gen X also experienced a few economic ups and downs. Many of them were also affected by the recession in 2008, with many of them losing their jobs and even life savings during this time.
Gen Y (Millennials): An Ideal Mix
Also referred to as the Millennials, Gen Y was born between 1980 to 1996. This generation is currently in their 20s and 30s, with the younger ones who have been in the workforce for some time now, and the older ones are settled in their career. This generation has grown up entirely on technology and are also known as “Digital Natives”. Some of the older Millennials are married, but overall, few of them have children- either by choice or as a result of economic circumstances.
Unlike the previous generation, education for Millennials was far more expensive. College fees now are more than double of what it used to be in the 80s and 90s, leaving most Millennials having entered the workforce with the heavy burden of student loans. Also, a stand-out aspect of this generation is that they are more inclined towards getting a higher education. The job market has gotten more robust and more competitive for them. But this generation is also more focused on getting a job that offers them a work-life balance and also aligns with their passion and interests.
Another main point of difference between this generation and the previous one is that the Gen Y spend more on food, luxuries and travel; primarily experiences. While Generation X was all about waiting to be financially secure before indulging themselves, Generation Y is not hesitant about availing loans to indulge themselves. As a result, they are also constantly in debt. Their purchases are about getting the best, rather than just meeting a necessity.
The older ones in this generation, however, have started to settle down, think about building a house and investing more. And since they have seen their parents go through the recession or have themselves gone through the recession, they also have an urge to save for a rainy day. But they do not limit to the low-risk options like Gen X. They choose stocks and mutual funds and other options that offer good returns. Generally speaking, they invest more wisely and are ready to take a few risks along the way.
Gen Z: The Have-It-Alls
This is the generation was born during the years 1997 to 2015. Also known as “the social media generation”, Most of them are still in school or college, while the older Gen Zers are applying for internships or starting their first job. Either way, they currently have limited spending power.
This generation has a very liberal attitude towards societal causes, are influenced by social media and highly trend-driven.
Thanks to online courses and focus on skill-based employment, Gen Z has access to more jobs in the market, as a college degree is not a necessity any more. Online courses have made education cheaper and skilled students can find an excellent job without incurring substantial student loans.
Having watched their older peers become crushed by debt, a dominant 57% are more inclined towards saving their money. It’s easier for Gen Z to take advantage of online resources and their parent’s knowledge to guide their investments. This generation is also less likely to take the traditional career route, with many of them aspiring to becoming entrepreneurs.
So, Who Knows Best?
Each generation’s financial habits has its merits and demerits, that are widely influenced by current socio-political. It’s easy to blame an entire generation for being “frivolous” or “irresponsible” without taking a look at the broader picture of how major events combined with individual attitudes have shaped each age group’s collective psyches.
We live in the information age, and every generation can make use of the wealth of information available at their fingertips to make the best investment decisions. So it largely pertains to an individual rather than a generation’s!