Generation X, those Americans born between 1965 and 1980, are lamenting their personal financial stability these days, and aren’t above offering some mistake-avoiding advice to younger Americans.
Exhibit A is a new study from the CFP Board titled “Lessons Learned: A Survey of American Gen Xers,” released in late September.
In it, a whopping 95 percent of Generation X told researchers their financial management mistakes “cost them real money.” Of the errors they admit making, 37 percent of Gen Xers regret not saving enough money for retirement the most.
Additionally, 48 percent of the 45–60 age cohort noted that their financial missteps have cost them at least $100,000 over their lifetimes. Also, 13 percent reported money mistakes costing $500,000 or more.
Study backers say the Gen X money regrets are real, and that these regrets tend to persist for a while.
“Gen X shows how early money choices echo for decades,” said Kevin Keller, CEO at the Washington, D.C.-based CFP Board, in a statement. “Young adults can learn from that history and shape a future of greater financial freedom with the right professional advice.”
One significant reason Gen X struggled financially was a misguided attempt to emulate the Baby Boomers, who have generally fared better with their money management decisions.
“Rather than listening to their parents, the Silent Generation, Gen X'ers looked to their older peers, the Boomers, for guidance as to how to operate in the modern economy,” Caleb Bogia-Curles, founder at the financial planning firm Focused Founders Wealth Planning LLC in Lancaster, Pennsylvania, told NTD. “This is very normal, and usually a good thing, as the times change quickly.”
Unfortunately, though, the Boomers got away with bad behavior in the 1970s-1990s, such as having insufficient emergency funds,” Bogia-Curles said. “They got away with it because of an unprecedented economic boom. Gen X tried that, and investing in the stock market too, in the late 90s and late 2000s. These were some of the worst periods for the market, which punished them heavily.”
3 Pieces of Financial Advice From Gen X to Their Younger Peers
In the CFP Board report, analysts compiled several strong suggestions made by Generation X to Millennials and Gen Z, in hopes that they won’t make the same mistakes.Here’s what they recommended most.
Don’t engage in financial ‘wrong-think’
Gen Xers say that most of their money mistakes stemmed from fundamental misconceptions that today’s young adults may also hold.
According to the study, 23 percent said they were mistaken in believing credit cards could help build wealth, or that wealth-building required a huge corporate salary. An equal number regretted not building a robust emergency fund.
“Beyond those pressures, nearly half (45 percent) said financial 'FOMO', better known as ‘fear of missing out,’ made Gen X wish they had started planning sooner,” the CFP Board reported.
Take the long view
Gen X also put too much faith in quick financial fixes, which rarely panned out for them.
“If you’re in your 20s or early 30s, don’t believe the shortcuts to building wealth,” Jason Hargrave, founder at Pillar Financial Planning in Raymore, Missouri, told NTD. “For those who get rich quickly, there is significantly more luck than skill. Hargrave advises younger Americans to do something many Gen Xers didn’t: create a plan and stick with it.
“Start with the basics: a small emergency fund, avoiding high-interest debt, and contributing consistently to a retirement account like a 401(k) or Roth IRA,” he said. “Even small amounts, started early, put an invisible compound force back on your side.”
Get serious about the big picture
Gen Xers also told the CFP Board that they waited too long for big-ticket items, such as buying a house. That cost them a built-in solid revenue generator, they warn younger Americans.
“20-and-30-something Americans need to stop goofing around with adulthood, and buy a house quickly, get married, have kids, and commit wholeheartedly to their financial growth,” Hargrave said.
Doing so means living within their means, as the younger set is in a “grossly unfair fight” against inflation, particularly in housing, Hargrave said. “They will never win that battle if they don’t commit to being victorious,” he noted. “If they simply 'wait until the time is right,' Gen Z and the Millennials will continue to be victimized by a system stacked against them.”
The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.