While the My Thrifty Life website is a handy resource for money-saving and finance tips, it has also always been a place where I can share my own saving plans and life updates. So, when I read a new study on insights into the generational finance gap, I knew I wanted to discuss those findings with you and try to understand the results myself.
The survey was conducted by MoneyPlus, the advice and support service for individuals in the UK seeking financial aid. They asked three different age groups – Generation X (aged 45-60), Millennials (aged 29-44) and Generation Z (aged 18-28) – about how they approach their finances, specifically in relation to four key areas: holidays, retirement, lifestyle and debt.
The survey showed a good level of financial responsibility across all demographics, with over 60% stating that they have an emergency fund for unexpected costs and life changes. Many of the financial pressures fairly equal across age groups too, with each generation experiencing similar worries about debt, retirement and how to pay for the things they need.
Here’s a bit more of a deep dive into the results and some surprising insights for the future…
Generation X
Rather than confirming the belief that older generations have fewer financial pressures and more disposable income, it suggested that Generation X may be the most financially strained. I’ve been guilty of assuming that earnings increase as you age, and with that comes the ability to pay off a mortgage, grow a savings pot, plan for retirement and be financially stable.
However, the statistics show that many in this demographic have had to forego holidays and have less disposable income while paying university fees for their older children, helping them to get on the property ladder or spending on care for elderly relatives. So many extra expenses that I hadn’t considered but that certainly come into play between the ages of 45-60.
Many are not prepared for leaving the workforce, with 74% of Generation X saying they were worried about their financial situation in retirement, which is 1% more than Millennials. I’d assumed that it was just my time of life that people began worrying about pension planning so it was a surprise to hear that the 45+ bracket are just a stressed by impending retirement as I am!
Plus, even though many Gen X-ers have an emergency fund, almost 50% also have debts. The statistic that interested me in the debt and savings categories is that this generation seems to be really open with their partners about their finances, rarely hiding debts from their partners or keeping a stash of savings.
I personally like this approach to finances within a couple; my husband and I have always had a joint account and joint savings and made joint repayments if we owed anything. It’s only in the past couple of years that we’ve opened separate ISAs and pensions but we still split our joint savings equally between these accounts. I enjoy being completely financially equal with my partner but I know it doesn’t feel like the right approach for everyone – maybe we’re just bring a Generation X vibe (learnt from our parents) to our relationship.
Millennials
I was most interested to read about the survey results for Millennials because that’s the age bracket I fall into. I think the campaign is a pretty good reflection of how life is for me and many of my friends and family members. So, the results were reassuring, yet offered insights into improving our financial situations for the future.
As I’ve just mentioned above, the statistics around debt and savings confirmed that my husband and I are not necessarily doing finances the same way as others in our age group. Millennials are most likely to have savings and debts that they hide from their partner although, of course, many in this age group many not yet be married or have joint financial commitments like a family or mortgage.
Even though there didn’t seem to be significant differences between the ways that Millennials manage their money compared to the other age groups, the results showed they are the group most likely to rely on inheritance to improve their future finances and retirement. An interesting lesson to take away from this campaign is therefore to try to start saving and not have to rely on a future windfall, as it’s not guaranteed.
Having been self-employed my whole career, I hadn’t considered starting a pension until a few years ago. I’m sure I’m far behind my employed peers but at least I’m saving something. The saying goes that the best time to start investing (or start a pension) is yesterday (!) and the second best time is today, so the sooner you get started, the better your financial future will look.
I’ve previously shared some unusual ways to save for retirement so be sure to check that out too.
Generation Z
It was interesting to see how social pressures and social media affect the finances of the younger generation however, they were not the only ones to be influenced by these aspects. Sure, they’re more likely to spend more on holidays (influenced by beautiful photos and adverts on social media perhaps?) but the statistics show that they’re about level with Millennials in terms of using buy-now-pay-later options for shopping.
Likewise, they feel similar pressure as Millennials to spend money on their friends’ milestones, such as a baby shower, wedding or a hen party holiday. It seems that whenever a friend has something to celebrate both Gen-Zs and Millennials will be there to join the party and make it special.
While that’s a fabulous way to be in terms of friendship, it seems to be hitting their bank balances hard. So, an insight from the campaign that might help is to sacrifice your own holiday if you’ve got a hen-do or stag party coming up and spend your holiday fund on a going away with your friends instead. That way, you’ve still spent the same money rather then it costing extra on top of your usual vacation.
Last, the thing I found most surprising about Generation Z is that they were the group least likely to have debts and most likely to feel comfortable with their financial situation. This confidence might be linked to having fewer responsibilities at the moment but, if they are able to keep up the good work and start saving for retirement now, they’ll be the most well-off and stable of all generations in the future. Good on them!
Top takeaways
- Seek financial advice from a free debt help service if you’re struggling at any time of life
- Pay off debts to minimise future financial commitments
- Start saving an emergency fund now
- Begin contributing to a pension if you’re not already
- Don’t rely on inheritance for your retirement – save as much as you can now to minimise financial pressure in retirement
- Share your financial situation with your partner, especially if you need help
- Forego your vacation if you’d rather spend your holiday fund on celebrating a friend’s milestone
I hope this little overview of the ‘The Generational Gap of Finances’ study has helped you to think about your own financial situation and any changes you would like to make over the coming years. In the comments below please let me know which results you identify with the most, I’d love to hear how you’re tackling your personal finances or making changes to your situation.
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This article is a sponsored collaboration. The pink links in the content indicate a sponsored link or information source. The blog post reflects my own experience and the sponsor hasn’t had any control over my content 🙂
