The world that Baby Boomers learned to manage money in is very different from the world that Millennials grew up in and the one members of Gen Z live in today. While age is far from the only determining factor for a person’s saving and spending habits, understanding broad generational differences may help you better understand the people in your life and make informed financial decisions.
Baby Boomers
Baby Boomers (or “Boomers”) were born between 1946 and 1964. That means the youngest boomers are quickly approaching retirement age, and the oldest are nearing their 80s. Boomers have witnessed periods of economic prosperity and precarity in the United States, which may have shaped how they spend and save.
Banking
Boomers may stick to the same bank they’ve used for decades instead of trying out different options. While they value accessible brick-and-mortar locations and ATMs, Boomers are quick to embrace online banking tools.
Budgeting
Boomers have had time to establish careers, save, and grow their wealth. According to a study by Bank of America, older generations tend to spend more than younger generations.1 Some Boomers may also make a little extra money in unique ways, like through the cash value a universal life insurance policy has accrued.
Retirement
The majority of Boomers have reached retirement age. However, due to inflation, retirement savings may not go as far as they used to. Many members of the Baby Boomer generation work at least part-time to increase their savings. Others may move in with family members or adapt their retirement goals to meet their means.
Millennials
Millennials, born between 1981 and 1996, have witnessed significant economic challenges since they were teenagers, including the Great Recession. These experiences may have influenced their saving habits.
Banking
Millennials don’t necessarily have the same brand loyalty as their predecessors—many shop around, comparing rates and offerings. Mobile banking is especially popular among Millennials.
Budgeting
Debt and the cost of living make saving complicated for Millennials. Many members of this generation look to gig work and side hustles that bolster their budgets.
Whole life insurance may seem difficult considering credit card debt, student loans and a high cost of living, but Millennials need to keep big-picture goals in mind. These might include buying a house and saving for retirement. Millennials can set themselves up for success by putting money into life insurance and other financials tools.
Retirement
Contributing to retirement takes dedication for Millennials, who often juggle many expenses. They may participate in employer-sponsored retirement plans like 401(k)s and are more likely than other generations to explore Roth IRAs for their tax benefits. This generation values flexibility and is also open to non-traditional retirement savings options.
Gen Z
Gen Z, born between 1997 and 2012, is the youngest generation in the workforce. The internet has played a significant role in many Gen Z members’ lives since childhood, making them more tech-savvy than previous generations. Members of Gen Z also tend to value social justice and sustainability, which shapes how they manage money.
Banking
Gen Z may be the most comfortable with online banks and fintech. They use mobile banking apps, digital wallets, and peer-to-peer payment platforms. The youngest generation values speed, convenience, and transparency in their banking experiences and isn’t always interested in traditional banks.
Budgeting
Gen Z is broadly cautious about debt and strives to avoid it. That might mean setting strict budgets, saving diligently, and shopping second-hand. Members of Gen Z may also turn to social media and online communities for budgeting guidance and support.
Retirement
Although many are just starting careers, Gen Z is already thinking about retirement. They understand the importance of starting early and may automate savings. Socially responsible investing is also popular among Gen Z, who want their money choices to align with their values.
Understanding the saving habits of Baby Boomers, Millennials, and Gen Z can provide valuable insights into how each generation approaches financial security. Embracing the strengths of each generation’s approach can help you build a more robust and adaptable financial plan for the future.
Source:
1 https://institute.bankofamerica.com/economic-insights/will-silver-spenders-continue-to-outpace-the-young.html
