Home  chevron_right  Consumer Research  chevron_right  Saving Habits Throughout Generations: From Baby Boomers to Generation Z

Saving Habits Throughout Generations: From Baby Boomers to Generation Z

  • event_available 05/16/2022
  • timer 21 mins to read

Introduction of Shopping and Saving Habits

The way people spend money can be affected not only by their lifestyles but also based on the timeline and events that shaped their opinions. There is an underlying reason why Millennials spend more than previous generations and why some Baby Boomers excel in saving for retirement and others struggle.

The financial behaviours of generations give an insight into why some cohorts can afford to spend a lot of money annually, but others struggle to survive with increasing debt. It is necessary to remember that the characteristics can clash, but most importantly, every individual creates their own path that can lead to financial success or failure.

In this article, you will learn how to properly manage a budget and exclude bad money habits to generate more income. Moreover, four main generations will be discussed in detail: Baby Boomers (the oldest generations), Generation X, Millennials, and Generation Z (the youngest generation). Each cohort’s saving and spending habits vary, and so does the way they deal with their finances.

Key findings:

  • Baby Boomer spending habits are very excessive, compared to any other generation.
  • Generation X’s home equity was greatly reduced, but their hard work and expertise helped them recover the quickest of any other generation.
  • Millennials spend a lot on shopping and entertainment, and they have the biggest purchasing power.
  • Members of Generation Z have a lot of opportunities, provided they correct and stick to good money habits.

How to Manage a Budget


Managing a budget is exhausting, yet it is an efficient way of keeping track of all the expenditures and income. It is often associated with limiting financial resources and trying to save on everything - however, it is far from the truth. It should be considered as a tool that helps calculate and predict net income and identify how much money is left after purchasing all the necessities.

In order to keep track of finances, it is necessary to create a budget plan, either written on paper or kept in an excel sheet online. Every income source and expense will be registered on this document to help see a clear picture of the current financial situation.

A goal for keeping a budget plan can be for purchasing a property, opening a business, or something as simple as living comfortably and not worrying about running out of cash. Budget tracking is also a useful way of finding out what income is spent on the most. As a result, it will be easier to decide what expenses should be cut down or prioritised.

  1. Analyse your income. This can be done by gathering all the information about where the income comes from and where it goes. It can be used to pay off the house mortgage, student loan, credit card bills, insurance, etc., or purchase groceries, rent, and utilities.
  2. Divide expenses into fixed and variable. The former kind is the fixed amount of money paid monthly for thighs like mortgage, rent, or a loan. Those are the obligatory expenses that do not change over a specific period of time. In contrast, variable expenses can be different each month. Those include money spent on leisure activities, food, and going out.
  3. Find out the approximate amount of money spent on variable expenses. It is advisable to look at the history of transactions from the past two or three months. Once every expense is calculated, it is time to compare it with your income. Having more income than expenses, the remaining money can be set aside for a rainy day or savings. Otherwise, the balance in budgeting needs to be restored.
  4. Reduce variable expenses. Obviously, the costs spent on leisure cannot be totally eliminated because it may worsen well-being and quality of life. Despite this, cutting costs on eating out and clothing will solve the problem.

Achieving a goal will become easier when keeping track of finances and adjusting it every month in order to pay for fixed expenses and have extra to spend on pleasure. Documenting monthly expenses and income will assist in comparing how much is saved and what can be improved in the following months.

Practical Saving Tips to Increase Monthly Income

How to increase monthly income? (source: https://pixabay.com/illustrations/financial-analysis-accounting-4560047/)

Although most saving tips are known to many, it is sometimes hard to stick to them as effective as they are. However, a little preparation before shopping or allocating a percentage to savings can go a long way. One of the most practical methods anybody can use to effectively manage a budget is the 50/30/20 method, proposed by Senator Elizabeth Warren. She describes how an income after tax can be divided into three categories: needs, wants, and goals. It is a general guideline that is adjustable to any income.

Saving money for the better financial future


  • 50% = for essentials like rent, utilities, groceries, insurance, etc.
  • 30% = for variable expenses like eating out, spending money on hobbies, travelling and other recreational activities
  • 20% = for savings (or if required, to pay off debt)

The guideline of 50/30/20 should be tracked with a budget planner. Consequently, anyone who follows the rule will be able to control spending and manage to save or pay off a loan without a need to prolong it. It will also help identify and eliminate things that are not worth buying and prioritise absolutely necessary items.

According to the Office of National Statistics, the mean household income after tax in the UK was £35,900 in 2020. Divided by 12 months, it makes £2,990 of net income.

Mean household income in the UK in 2020 (source: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyear2020)

Following the rule of Elizabeth Warren, the calculations are done as follows:

  • 50% - £2,990 x 0.50 = £1,495 for needs
  • 30% - £2,990 x 0.30 = £897 for wants
  • 20% - £2,990 x 0.20 = £598 for savings

As effective as this method can seem, it is flawed, especially if the net income is too high or too low. In both cases, there is a risk that a family can be incapable of saving anything or, vice versa, saving and spending way too much. Therefore if the total monthly amount is not enough to save the whole 20%, it is best to reduce the percentage to 10% or less. On the other hand, having bigger earnings it would be wise to allocate most of the funds for future investments.

Other useful saving tips:

  • Before shopping, it is useful to prepare a list of required household items and groceries and avoid purchasing non-vital items.
  • Take advantage of discounts, coupons, and other benefits that can appear in stores, museums, or subscriptions.
  • Reduce the frequency of dining out and shopping online.
  • Unsubscribe from streaming services or cancel memberships that are not used.
  • Monitor monthly spending and find ways to cut it down.

Spending Habits That Drain Your Savings

Bad spending habits (source: https://pixabay.com/vectors/money-flying-coin-away-hand-6856469/)

There are spending habits that don’t look particularly harmful for a budget - however, they can make a big hole in a wallet. Eliminating certain spending practices will help generate more savings in the future. Hard-earned money is easy to spend as the items people purchase feel like a reward for working long hours. However, such actions put spenders further from their financial goals.

Another problem that can reduce savings is spending without intention. An example of this can be ordering more than planned or shopping for something that is not needed for the time being. It is easy to plan rather than act when it comes to saving and spending. People get tempted by discounts or want to satisfy their temporary needs or urges, rather than stop and double-think whether the expense is necessary or not.

Make Budgeting A Habit

There is nothing more effective than budgeting as it clearly sets your financial boundaries and limitations. Moreover, it will prevent you from a vicious cycle of spending one week less, next week more, and the following week less again. Not knowing how to handle your income is not only exhausting but also diminishes motivation and willpower. A well-managed budget is there to prevent it.

However, for some people, it can be hard to hit their budgeting goals, leading to a feeling of helplessness. It can be due to a low salary or an investment that needs to be paid off quickly. In this case, it is best not to budget every penny but to set a limit of how much can be spent. For example, instead of paying by card, it is better to take cash and actually see how much money is being spent for dining or drinking out. This method also prevents people from overspending since there will be no cash left.

One-Time Purchases

Another bad spending habit is indulging in one-time wants. This means instantly making a purchase that will satisfy your wants temporarily. As gratifying as it can be, most people don't consider if their purchases have any long-term benefits. Consequently, individuals who spend money on immediate satisfaction will distance themselves from future goals that hold more value in life.

To break this habit, you should ask yourself whether this expense is worth the money or whether it is best to delay the satisfaction that will come later but last longer. It is a challenge to refuse services or products that are easily attainable at the moment, rather than trying to save up for retirement that is many years away.

Copying Someone’s Lifestyle

Lastly, following in suit of the people around you can greatly influence an individual’s spending habits without a realisation of it. Seeing someone from the neighbourhood or a circle of friends who have the money to buy luxury items from expensive cars to branded pieces of clothing can subconsciously make an individual spend more. As the Federal Reserve Bank of Philadelphia research states, it happens to people whose neighbours won the lottery and started purchasing things they couldn’t afford before.

As a result, an individual under the pressure of keeping up with others can increase their expenses and soon spend most of their income and savings, or take loans to satisfy those wants. However, one shouldn’t ignore that other people might not have any set financial goals or readily available savings.

Other typical money habits that empty wallets:

  • Frequently eating out rather than cooking at home.
  • Buying a lot of food that goes to waste.
  • Making impulse purchases.
  • Paying for subscriptions that are not in use.
  • Not allocating money for retirement or an emergency fund.
  • Spending salary to quickly, rather than dividing it into needs, wants, and savings.
  • Buying the latest electronics and pieces of clothing.

Introduction to the Different Generations

A generation is a group of people born in the same time span and raised in the same environment. Every generation group has distinct characteristics and values intrinsic to their time. The common characteristics of every group are shaped by the experiences and events that form opinions, along with habits of shopping, communicating and beliefs. Although it doesn’t neglect the fact that every individual is unique, these cohesive groups typically share the same values. It is important to note that even every generation differs when researched in different locations.

Groups of generation by the Pew Research Center (source: https://www.pewresearch.org/fact-tank/2019/01/17/where-millennials-end-and-generation-z-begins/)

In total, there are 6 generations:

  • The Greatest Generation (born before 1928)
  • The Silent Generation (born 1928-1945)
  • The Baby Boomers (born 1946-1964)
  • Generation X (born 1965-1980)
  • The Millennial Generation (born 1981-1996)
  • Generation Z (born 1997-2012)

The biggest one is the Millenials (72.26 million in 2020) has surpassed the previous biggest population of the Baby Boomers (70.68 million in 2020). The most recent generation is currently Generation Z; however, it is soon to be succeeded by Generation Alpha (born in the early 2010s).

This article focuses on the shopping habits of four generations: Baby Boomers, Gen X, Millennials, and Gen Z. To understand the characteristics of every generation, it is important to note down what events they lived through and what shaped their opinion and beliefs.

Modern historic events by generation (source: https://www.pewresearch.org/politics/2016/12/15/americans-name-the-10-most-significant-historic-events-of-their-lifetimes/)

Every historic event that occurred in each timeline had a huge impact on every generation’s perception of the world. There are only two groups whose full history is yet to be written, and they are Millennials and Generation X. Although, they have already lived through the elections of the first black president and the tragic 9/11. The latest Generation Z can definitely include the COVID-19 pandemic and as a part of events that shaped their viewpoints, and some other overlapping dates that reflect why and how Gen Z members lead a certain lifestyle.

Baby Boomers

Born: 1946-1964

Age (in 2022): 58-76 years old

Population in millions (in 2020): 70.68

Who Are the Baby Boomers?

Baby Boomers are people born between 1946 and 1964, and the name for this generation derived from the rise of births after World War II, the so-called “Baby Boom.” This generation was actively involved in civil rights movements in order to change the world. And now, most of the early Boomers tend to be out of touch with the newest technology and trends in comparison to younger generations.

Some boomers have accumulated great wealth that they are not afraid to spend. And although they are entering retirement, many Boomers keep working and mostly hold senior positions in companies, owing to their years of experience and knowledge.

It wouldn’t be fair to exclude the population of Boomers that struggle financially and now face workplace discrimination because of their age. Having that said, Boomers grew up during a period that was better off financially than any other generation has had after them.

The advantageous conditions that Boomers had access to included free-of-charge education, favourable investment prospects, and better salaries.

The Baby Boomer generation lived through the events like the Vietnam War, Beatlemania and the assassination of JFK.

Generation X

Born: 1965-1980

Age (in 2022): 42-57 years old

Population in millions (in 2020): 64.95

What Is Generation X?

Generation X is the population born between 1965 and 1980; they are less talked about in comparison to Baby Boomers and Millennials. It comes as the result of being overshadowed by the biggest generations ever. Another factor that might have marked Gen Xers so insignificant is their attitude to life, particularly being sceptical.

This generation was thought to be a group of people who lived without a goal in life and lacked any motivation to work or self-develop. As it turned out, their interest in pop culture led to a non-traditional way of growing old. Being children of Baby Boomers, Gen Xers were also highly influenced by divorces that later impacted the way they started a family and approached financial issues.

Generation X was the only generation to suffer the biggest loss during the downturn when their home equity was greatly reduced. This resulted in owing more than owning. However, Gen X’s median net worth has risen 115% since 2010.

Gen X also had more women than men who were educated, yet both suffered from unemployment. And they were witnessing the progress and development of technology that wasn’t yet available to them.

Generation X lived through events like the End of the Cold War, the Fall of the Berlin Wall, and the AIDS crisis.

Millennials, or Generation Y

Born: 1981-1996

Age (in 2022): 26-41 years old

Population in millions (in 2020): 72.26

Who Are the Millennials?

Millennials were born between 1981 and 1996 and are famously known for their love of avocado toast and ‘wasting’ money. However, in reality, they are the total opposite of it.

In comparison to older generations, Millennials do not rush to get married, nor are they religiously active. During the 2012 presidential election, Millennials were 12-27 years old, and they were the prevailing voice over who would rule the country. Helping to elect the first black president.

When Millennials were shaping their world views, they were highly influenced by technology, particularly the rapid popularity of the internet. Thus, by some, they are viewed as lazy because they don’t follow suit with the older generations and are not fixated on buying property.

In contrast, other people view them as independent and self-sufficient since they were born into the digital world and can easily retrieve the answers to their questions or obstacles without outside help.

Millennials lived through events like 9/11, Obama presidential elections, and the Great Recession.

Generation Z

Born: 1997-2012

Age (in 2022): 10-25 years old

Population in millions (in 2020): 67.06

What Is the Generation Z?

Generation Z is defined to be born between 1997 and 2012, which means some of them are just entering adulthood.

Experiencing events like the Great Recession and post-9/11, Generation Z is believed to be a hard-working group of people. However, due to historical events, they are also members of an anxious generation. The population of Gen Z is the only one born into an ‘online’ world filled with advanced technology. They also grew up with the first black president and same-sex marriage legislation. They didn’t have to fight for their rights, and they don’t consider the rise of multiracial families an issue.

Generation Z grew up witnessing technological breakthroughs like the first iPhone. And as they got older, social media and all the information travelling around the web was already available to them.

Generation Z lived through events like global terrorism, the Trump election, Brexit, and the rise of social media.

Shopping Habits

Baby Boomers

Due to the generated wealth by Boomers, they are more likely to spend it on things such as luxury items and travel. According to research done by Visa Business and Economic Insights, even though Millennials are the largest generation in the US, it is Boomers that spend the most money and drive the consumer force. It has resulted from the fact that more Boomers aged over 60 enter retirement and have the financial resources to spend savings on travel and other wants.

Distribution of aggregate spending by age (source: https://usa.visa.com/partner-with-us/visa-consulting-analytics/baby-boomers-still-outspend-millennials.html)

As shown on the graph above, people under and over 50 share similar percentages. What is more, it is believed that people over 50 will occupy the whole 52% and more of aggregate spending.

Baby Boomers are no strangers to online shopping, and they shop for a variety of products ranging from home appliances to services like health care. Since they stay in the workforce for longer than other generations in order to support their presence in the community and due to good health, they are likely to keep spending more than younger generations of Generation X and Millennials.

Britain’s Baby Boomers have managed to save twice as much as younger generations, yet proving once again that Boomers are members of the richest generation. They save money not necessarily because they have to to survive but rather because they can do it. Another factor that has influenced their tendency to save is that many grew up during rationing after the war and had to live on with as much or little as was available.

This allows them to allocate a lot of money to a savings account per year, unlike Generation X, Y, Z. Some Baby Boomers also have lived to the fullest and might be no longer attracted to advertising campaigns promoting luxury must-haves.

Generation X

Unlike Baby Boomers, Gen Xers are reluctant to spend money on buying property. However, they do like dining out and enjoying leisure activities. This generation is known to be brand loyal over the years and stick to one retailer rather than look for bargains in other stores.

Gen Xers are in their 40s and 50s, earning the most out of all generations. They are hard-working members of this generation with some taking on two jobs to take care of elderly parents and growing children. And this pushes Xers to purchase bigger cars, bigger houses, and consequently spend bigger expenses daily. Similarly to Baby Boomers, Gen X spend a lot of money on groceries, utilities, entertainment, and various services.

Millennials

Millennials are stereotypically said to love avocado toast - it’s an indirect way of pointing out how irresponsibly they deal with finances. However, they were born into the age of the internet and technologies, which they often use to invest and generate money. Consequently, Millennials are well-educated tech-savvy individuals that have trust in technology.

Millennials are as brand loyal as Gen Xers and are potentially a target of marketing campaigns. And they are less prone to purchase property or luxurious items like cars as Boomers.

Considering these shopping habits, Millennials know the value of money and prefer to accumulate savings rather than spend them.

Generation Z

Since Generation Z is relatively a new generation and most of its members are still young, only a small percentage of them have started their careers. The one crucial aspect of their lives is that they were born with the internet and social media up and running. This, in turn, has a huge impact on how they do their savings and shopping.

Of all the previous generations, Gen Z consumers are the least attached to one brand and prefer a good bargain over a brand name or quality. Being highly active online, members of this generation would prefer to look for items sold for a reasonable price and stick to ordering online rather than going to traditional stores.

Spending on Needs

The essential expenses that cannot be ignored to continue living comfortably are the needs. Those usually include housing, groceries, insurance, and transportation. Some of them are monthly payments, while others occur more often, for example, on a weekly basis. Also called non-discretionary expenses, they are mandatory, and without them, it becomes hard to survive.

Healthcare

Baby Boomers are entering or are already in the retirement age, and insurance covers most of their expenses. However, this can soon change as the Boomer population is relatively large and can possibly drain government funds. Excessive costs are also incurred due to the many illnesses that the members of this generation experience, including diabetes, high cholesterol, hypertension, and obesity. Therefore, it is predicted that the older generation will have to pay from their own pockets as government funds won’t be able to cover the costs entirely. Even though new retirees pay from their personal savings, some of them might not be able to afford healthcare expenses.

When it comes to Generation X and Y, they tend to care for their parents and become part-time or full-time caregivers.

Millennials (Gen Y) seem to be disappointed with how the healthcare system works, and 45% of them do not have a primary care provider. Instead, they seek alternative models that provide services digitally with all the information available online. Thus, Gen Y consumers look for service providers that offer great flexibility and convenience.

Housing

Baby Boomers and Generation X prefer buying rather than renting a house, compared to Millennials, who although not homeowners allocate the most money on housing. As mentioned in the article from the New York Times, Baby Boomers have surpassed the Silent Generation in accumulated property wealth. Unlike their parents, they don’t rush selling it off and moving into a nursing house or with extended family.

Gen Xers also tend to purchase houses; however, only 31% of the market was owned by them in comparison to 44% owned by Baby Boomers in 2021. As far as it goes for Millennials, they only own 11%. Since Generation Z is just at the start of building their career and accumulating wealth, the research about them is still ongoing.

Another valid reason younger generations delay purchasing houses or establishing families is the increased property prices that many Millennials and Gen Zs cannot afford. Thus, 15% of 25-35-year-old Millenials find it convenient to live with their parents.

Utilities

Monthly bill costs of Baby Boomers and Millennials (source: https://globalnews.ca/news/5014805/baby-boomers-use-more-power-millennials/)

The expenditures on utilities and housekeeping include public services, fuels, housekeeping supplies and appliances. Baby Boomers yet again hold the first place of spending the most on expenses related to housekeeping, especially for electricity consumption. Baby Boomers consume more electricity than Millennials, and most of them think they actually use less electricity than older generations. As mentioned previously, some Boomers inherited big houses from their parents and saving up on electricity with spacious rooms and a ton of electrical gadgets can be quite hard.

The reason behind Boomers’ false thinking of their electricity usage can be because most of the younger generations (X, Y, Z) continuously use electronic devices without unplugging them and leaving them running overnight. However, devices like smartphones and laptops take up less energy than imagined.

The extra electricity money that Baby Boomers are paying for does not occur from their electronic devices but rather from added extras that require a lot of power. These include a heated floor, a hot tub or a sauna, a home theatre, or a beer or wine fridge. The houses or flats where Millennials and Gen Yers live are less likely to have these luxuries.

Food

Cooking at home is a standard routine for Baby Boomers who eat homemade food almost every day. It is not so common for younger generations to eat at home; they would rather have take-away or dine out twice as often as Baby Boomers.

Baby Boomers allocate 13.4% of their annual income to purchase groceries, while it is 12.5% for Millennials. Gen Xers are in-between these two generations, and they spend the most in gross terms - almost $10,000 a year.

Gen Zers are the only generation that spends the most money on food (23%) of their total spending. Gen Y consumers also prioritise purchases from sustainable and environmentally-conscious brands; therefore, they are more likely to buy plant-based meats than other generations.

Transportation

The study of people of different ages using transit in the 5 biggest developed US cities has shown that:

  • 43% of people under 30 (Generation Z and younger Millennials)
  • 12% of people between 30 and 60 (Generation X and older Millennials)
  • 9% of people over 60 (Baby Boomers)

The study also adds that 45% of those under 30 who have kids use public transportation weekly, compared to 16% of parents aged 30 to 60. Another interesting fact is that Millennials grew up driving around in cars, and their parents didn’t encourage them to use alternative means of transport like public transportation or bicycle, but now most of them delay taking driving lessons. On the other hand, Baby Boomers didn’t have access to cars and were encouraged to use public transit, and now the majority of them travel by car only.

Spending on Wants

Purchases made to improve lifestyle or satisfy a desire are called wants. Unlike needs, discretionary expenses are not essential to life and can be avoided. These spendings include travelling, buying new clothes, and spending money on leisure activities like going out for dinner and purchasing new electronics.

Travelling

Travelling is a big part of everybody’s life, but different generations have their own expectations when going on a vacation. According to AARP, Baby Boomers are big fans of visiting new places and ready to invest a substantial amount of money in prolonging their leisure time in a foreign country. Their average spending has risen to $7,800 in 2020, compared to $6,600 in 2019. For Boomers, travelling includes staying in luxurious hotels, dining out in top-notch restaurants, and overall treating themselves with expensive things.

When travelling, Baby Boomers prefer to spend their time calmly, sightseeing around a new place. Millennials, in contrast, seek an exciting active holiday, so they look for adventures and take city tours and visit cultural places of interest.

Fashion

Baby Boomers increased their spending on apparel by 28% in 2021. Although all generations like to refresh their wardrobes, Boomers do it extensively. There has also been a shift in how the older generation does shopping. During the pre-pandemic times, 82% of Baby Boomers would buy apparel in brick-and-mortar stores. However, when the physical stores closed down, they adjusted to shopping online. Since the stores have opened again, Boomers returned to their previous habit of shopping in-store but haven’t entirely disregarded their online shopping practices.

Millennials are the biggest cohort to hold the most buying power in the US. According to the 2019 research by McKinsey, together with Gen Z, these two generations spend a total of $350 billion, where $150 billion is spent by Gen Z and $200 billion by Millennials.

Gen Z consumers are very conscious of equality and environmental problems; therefore, they also tend to purchase second-hand clothes or other items. 47% of Gen Zs support sustainability and go to thrift stores. This generation is also not afraid to avoid and boycott brands that are unwilling to change their harmful practices.

Entertainment

Millennials are often said to waste a lot of income on entertainment; however, they only spend $1,500 on average. This results in 4.5% of yearly spending on entertainment by Millennials in contrast to 5.3% by Gen X and 6% by Baby Boomers. Dining away from home is a want that almost half of Millennials (47.3%) spend money on, too, compared to 41.7% of Baby Boomers.

Younger Millennials prioritise spending money on things that make their life fun and exciting, so they are more willing to buy branded clothes and go on frequent trips abroad.

For Gen Xers, entertainment looks slightly different from older generations. Teenagers and young adults are into purchasing and playing video games (26%), listening to music (14%), surfing the net (12%), and being active in social media (11%). They are more likely to spend money on streaming services than cable TV.

Top 5 entertainment activities of U.S. consumers by age group (source: https://variety.com/2021/digital/news/gen-z-survey-deloitte-tv-movies-ranking-1234954207/)

As the graph above shows, the Baby Boomer generation sticks to watching TV channels, while younger generations have switched to online leisure time activities.

Debt

Baby Boomers

Due to inheritance and accumulation of wealth, Baby Boomers tend to buy a lot; thus, they also take personal loans and mortgages. Moreover, many Baby Boomers also undertake student loans to support their children so they would have a good life.

Here is a breakdown of each type of debt according to Experian:

  • Average credit card debt: $6,043
  • Average student loan debt: $40,512
  • Average car loan debt: $19,306
  • Average personal loan debt: $19,700

Generation X

With the pressure to financially support their children and families altogether, Gen Xers experience anxiety and suffer from underpayment. They have a hefty amount of loans to pay, the sum of which decreases by the age of 48. According to one research by Experian, the majority of this generation has taken out a big loan for either a car, credit card, or studies.

Here is a breakdown of each type of debt according to Experian:

  • Average credit card debt: $7,155
  • Average student loan debt: $45,095
  • Average car loan debt: $22,307
  • Average personal loan debt: $17,733

Millennials

Both Gen Xers and Millennials acquire debt for covering the costs of healthcare provided to their parents. Healthcare is not the only thing that is draining Millennials’ wallets - education is a part of it, too. As the 2017 Generational Report from Financial Finesse states, out of $3.6 trillion in consumer debt, Millennials owe $1.1 trillion, and most of it is because of huge student loans.

Three financial priorities in 2016 sorted by age (source: https://www.financialfinesse.com/wp-content/uploads/2019/05/TT-Research-2017-Generational-Research-Report-.pdf)

As the column chart above shows, Millennials prioritise paying off the debt and saving up for retirement the most, compared to other age groups.

Here is a breakdown of each type of debt according to Experian:

  • Average credit card debt: $4,322
  • Average student loan debt: $38,877
  • Average car loan debt: $19,011
  • Average personal loan debt: $12,306

Generation Z

According to the study by Experian, the total US consumer debt in 2020 is $14.88 trillion, and members of Generation Z hold an average total of $16,043. Although the lowest one among others, it is steadily growing. At the same time, Gen Zs are young and have plenty of time to generate more money and pay off the existing debt. Moreover, they are in a great position to develop efficient money-saving habits.

Here is a breakdown of each type of debt according to Experian:

  • Average credit card debt: $1,963
  • Average student loan debt: $17,338
  • Average car loan debt: $15,724
  • Average personal loan debt: $6,004

What Generations Spend and Save the Most?

Although Millennials' lifestyle gave them a bad reputation as a generation that spends a lot of money on luxury items and doesn’t think about saving up to buy a property, it is still Baby Boomers who can afford to spend the most. And again, Millennials are the driving buying force, thanks for their brand loyalty; however, Boomers tend to enjoy expensive items as well.

When it comes to saving, this should be considered among Baby Boomers, Gen X and Y. For now, Generation Z is focusing more on career growth; however, the oldest members have already allocated an average of $35,900 in personal savings. Both Xs and Yes are leading when it comes to money left for retirement, Gen X being a bit ahead. And both of them are expected to retire before age 60.

What Saving Habits to Borrow from Each Generation

Every generation is different in saving and spending money, but every person is unique. There might be pieces of advice suitable for certain lifestyles, so it is important to keep in mind that every method of generating money can be tailored. There is no universal way that can help everyone; however, there are tips that can be applied and followed in everyday life to maximise savings’ accounts and reduce monthly expenses.

Since Baby Boomers are entering their retirement and some of them keep their jobs, their main goal is to save up for the future in order to provide for their comfort. 80% of Boomers contribute to their retirement plans, compared to other generations. The younger generations have plenty of time and resources to do the same.

Generation X was the only one to suffer from financial losses the most and managed to recover from them, too. It shows how diligently they worked and managed to increase their net worth over the years. The most important habit to borrow from them would be to do proper planning that will help you survive even in a burdensome situation.

Millennials are the generation that doesn’t strive to purchase property and establish families early. Instead, they prioritise active saving. This includes putting money by for an emergency fund, retirement, and, when the time comes, for a future home. In order to achieve financial goals, cutting down expenses on wants would be helpful. Another tip to take from this generation is to be wary of personal debt that can consistently drain the wallet.

Last but not least is Generation Z, the youngest of all. As the generation grows old, it is important for them to improve financial knowledge, and that is precisely what everybody should do, too. As Bank of America confirms, Gen Zs are likely to take control of their funding and seek guidance from their financial role models in order to live a life they want and plan their retirement plan.

In Conclusion

The differences between generations are apparent, and they were impacted by the time and events their members experienced and are living through right now. Another factor that plays a big role in how people manage their personal finance is digital transformation. Generation Z has the biggest trust in technology and finance managing tools than previous generations. And Baby Boomers are still adjusting to the online world, learning how to use modern devices to do shopping or to read the news. When it comes to the generations in-between, X and Y, they are working hard to earn for retirement. However, Millennials spend the most money on luxuries and experiences, and Xers earn to pay off loans and provide for their children and parents.

Life can be breathless for the younger generation; however, they will need to become more literate in finances, whether from a course or a financial advisor. Having trustworthy and proven information that can be put to use can help members of Gen Z to purchase assets and retire early.

As for other generations, they need to review and replan how they budget their income and come up with the most efficient and personalised budget plan for the future. This may or may not include cutting down some costs on entertainment or lowering energy and water consumption.

Overall, every generation indicates the money habits that should be borrowed and avoided by all. Every person is unique, and there is no way to predict the future simply based on the general characteristics of generations.