Generation X Lagging Behind Millennials Financially


We wouldn’t normally think that a previous generation would be worse off financially than a preceding one, but at least in some important ways, Gen Xers are worse off.

We usually assume that millennials, generally considered to be the generation born between 1980 and the first few years of the new millennia, struggle more than previous generations with their finances. We sure read plenty about this in the media, where we’re made well aware of the challenges these younger people face.

Millennials are known for things like spending too much money, not saving enough, having trouble getting good jobs, even having difficulty fleeing the nest at ages where we normally expect people to move out of their parent’s home and forage off on their own.

These are generalizations of course, and while there are some people of this generation that are doing fabulously financially, when we see a fairly high percentage of them not doing so well, the average millennial we could say, then we may want to point these things out and perhaps even share some tips and lessons that have been learned by previous generations, learned often the hard way.

Therefore, we might think that people from the generation known as Generation X, or Gen X for short, people who were born from the early 1960s to 1980, should be in a position to at least instruct them on how to manage their personal finances to some degree anyway. When we look closer at how this older generation is doing, we see a different story being told, and we might even think that these younger folks could give some advice at least to the older generation.

Millennials range from people in their late teens to those approaching 40, and this currently encompasses the building years, where one starts one’s career as well as starting to raise a family. Both income and experience are lower in general than the previous generation, the Gen Xers, which is one of the reasons why we expect newer generations to struggle more.

There’s also the fact that technology has improved so much from when Gen X kids were young and when millennials were in their formative years, perhaps exposing the millennials to a more sophisticated and effective means of having Pavlov ring the bell and seeing them salivate. It’s not that this drive to spend isn’t out there in a way we have never seen, but it may be that being exposed to more of a barrage of messages as one’s mind forms is just more effective.

Overspending is An Epidemic Among All Age Groups

When we look upon our culture, and much of these influences and behaviors are culturally rooted, we do see that an incessant desire to spend is very common, and this is the ultimate undoing of many a financial plan. We do not save enough as a culture, and the reason we don’t do well at this is because we are driven to spend more than we should.

This is a world where people will spend the night out in the cold to get the latest iPhone, even though they could probably get one soon enough by being a little more patient. We want it all these days and we want it right now, which means of course borrowing when you can rather than saving for something.

The people who are lined up outside these stores do tend to be millennials, and if we are wondering who has been affected the most by all of this frenzy to spend, we would just assume it would have to be this group. If we wonder who is doing the worst at saving, once again we’re going to assume it’s this newer generation.

On the other hand, Gen X isn’t particularly well known for managing things either, although since we are talking about people who are now in their 40’s and 50’s, and significantly more mature, we would think that they are surely doing a better job at managing their life.

Gen X is considered to be the first generation in memory that is expected to be worse off financially than their parents though, so that should be a red flag already. It also may be that this extra time has allowed this generation to be more exposed to the drive to spend, and perhaps this extra time has resulted in their being even more influenced.

If this is a sickness, Gen Xers therefore may have been sick for longer, quite a bit longer, and this in itself may explain some of the apparent incongruities when compared with millennials.

Comparing the Generations Across Several Important Categories

We can start with credit card debt comparisons between the generations, and this is valid measuring stick because it does tell us how much spending people are setting aside to repay in the future. The generations with the lowest credit card debt are millennials and people over 74 as it turns out.

Millennials and the elderly are also are the least likely to have a credit card among all age groups, with Gen Xers holding both a lot of credit card debt and a lot of credit cards.

Gen Xers also spend more on things like restaurant food, prepared beverages, and lottery tickets, $3473 a year compared to just $2758 a year for millennials. This in itself does suggest less restrained spending among the Gen X folks.

Both generations average $35,000 in retirement savings, which should be a real red flag given that Gen Xers have had so much longer to save. If we were to compare this by year spent savings, millennials would come way out on top here.

Gen Xers also have more debt overall, as well as a less promising outlook on their financial fates. Only 33% of Gen X believe that they will reach their financial goals, compared to 44% of millennials.

We can explain some of these things in defense of Gen X by looking at their higher incomes and then reasoning that it may make sense for them to have more debt because they make more money, or are at a point in life where spending naturally increases, and their poorer outlook overall may be due to understanding the challenges of reaching their goals better.

When you look at the whole picture though, this generation does not appear to have their act together compared to the newer generation in a way we would normally expect, and may indeed be doing worse at this.

It is not that difficult to know the right thing to do, but it can be far more difficult to actually do it, and resist urges to keep ourselves struggling and on a path towards failure. It is only when we give the future its proper regard, instead of just seeking to live in the now and live it up as much as we can, or can resist setting our goals aside in favor of keeping up with cultural norms about spending, that we have a real chance here, regardless of what generation we are in.



Monica uses a balanced approach to investment analysis, ensuring that we looking at the right things and not confined to a single and limiting theory which can lead us astray.