approaches to savings, investment and spending

Generation Y, X and Baby Boomers: Approaches to Saving, Investment and Spending

Rates and Fees verified correct on December 4th, 2016

Research studies have continued to show that our attitudes, beliefs and actions are influenced by the generation we belong to, and that Baby Boomers, Generation X and Generation Y each have distinctly different ways of doing things.

This extends to the way we approach our investments, savings and spending and by understanding the prevailing attitudes of your own generation, you can see which attitudes aren't that helpful and might not work for you and which ones you want to cultivate to benefit yourself and those around you.

Baby Boomers

The Baby Boomers (born between 1946 to 1964) traditionally have long-term views of investments and have grown up with a bit of financial conservatism, which they inherited from their war-era parents, with the memory of the Depression part of their psyche. Baby Boomers are credit savvy and have grown up with the view that credit and debt can be used to invest in appreciating assets, and many of them have done very well out of the property market. Generally, they don't borrow excessively, and they know how to work hard to pay off their loans. As a result, this generation has accumulated a very healthy bottom line and a wide range of assets.

Tips for Baby Boomers: Many Baby Boomers are now in retirement or very close to retirement so superannuation, access to cash and investments, ands setting up reliable income streams from savings accounts are all a key focus. It is better for Baby Boomers to seek low risk and guaranteed return investment with products such as term deposits. See: Savings Account Finder's Term Deposit Account Comparison

Generation X

Generation X-ers are born between 1965 and 1980 and they have accumulated more "lifestyle" debt than their Baby Boomer parents. For many Gen X the first debt they accumulated was their HECS debt whilst at university. This generation has spent many years studying at uni and TAFE, and this delayed their earning capacity and meant they started accumulating assets much later than their parents. Generation X had an interesting time during the 1980s – a time of rising assets prices – and they learnt to play the stockmarket in a way that generations before them did not understand. Overall, Gen X have a greater education and understanding of finance and investing and have more diversified portfolios, they also have a strong work ethic so they are generally in a good financial position.

  • Tips for Gen X: Generation X tend to have a range of investments and diverse portfolios. Because many of them still have quite a long time to retirement, they might be more interested in longer term investments such as investment property, so making the most of negative gearing opportunities and doing research to find the most competitive home loans is a great place to start. See: Finder Home Loans

Generation Y

Generation Y (born between 1981 and 2000) have grown up in the Information Age and have a high degree of financial literacy and know where to get the info they need and how to find investment opportunities. However, this generation has grown to expect fast results, and as a result they have a huge spend on gadgets and depreciating assets (such as Smart Phones, cars, clothes and furniture) and on experiences (such as travel or education) rather than having a more long-term view on saving for and investing in appreciating assets. This is coming at a time when many Gen Ys feel they've been priced out of the housing market because of the record high unaffordability levels, so rather than save harder, many of them are tending to give up.

  • Tips for Gen Y: This generation tends to have more credit card debt than any other generation before it, so the first step is to clear this debt which usually comes with very high interest. Check out the low balance transfer offers on new credit cards, with zero or low interest balance transfers and try and clear all your debt during the honeymoon period. See: Credit Card Finder®'s Balance Transfer Credit Cards. The other idea for Gen Ys is to open a high interest savings account and put a savings plan in place by thinking about what type of consumables you can give up so that you can start to set yourself up for a financially secure future. See: Savings Account Finder

We live in a constantly changing economy and we can all learn from lessons from past generations and see what they've done well and how this has benefited them. With the economy settling into some uncertain times, the old adage of the Baby Boomers - to keep debt under control and work hard to pay it off as quickly as possible - may just become the mantra for the next generation.

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