Gen X: Finding financial wellness for a unique generation
Monday, 21 October 2019
If you were born between 1965 and 1980, chances are you watched a fair share of MTV, can recite every line from The Breakfast Club, and can remember what life was like without the Internet and cell phones.
As a Gen Xer, you or one of your close friends was more likely to be a latchkey kid with two working parents who may have been divorced. Those early experiences helped shape you into a savvy, self-reliant, and entrepreneurial adult with a healthy dose of skepticism.
But this generation had to overcome an unusual number of hurdles along the way, which left them trailing behind the pack financially, according to studies. While about 75 percent of Gen Xers make more money than their parents did at the same age, studies show Gen Xers face far more finance stressors than Boomers or Millennials.
The debt totals are nearly six times greater than that of their parents when they were the same age. Upwards of 28 percent have dipped into their retirement plans as a source of cash. Nearly 40 percent of college-educated Gen Xers who earn more income than their parents did at the same age also carry student loan debt, with a median amount owed of $25,000.
The reasons are several-fold:
- They were hit by the recession of the early 90s right as they were starting their careers.
- Then the tech bubble burst in 2000 and their savings took a hit.
- They also weathered the Great Recession, which slashed housing values and ballooned unemployment rates. As a result, they lost nearly half their wealth between 2007 and 2010, according to the 2014 Pew report.
- Meanwhile, many Gen Xers are sandwiched between the costs of caring for aging parents and children at the same time. A 2013 Pew Research study found that nearly half of all adults in their 40s and 50s both have a parent age 65 or older and are either raising a young child or supporting an older one.
“Stagnant incomes, large mortgage balances, and providing for their children in an environment with a higher cost of living all contribute to this," says David Bakke, a finance expert with personal finance blog Money Crashers.
3 steps toward financial wellness
If you fall into this demographic and can relate to these financial hardships, don't despair. Here are three things you can do to improve your money situation:
- Establish a plan. Regardless of how much you owe, there are people who can help. Talk to a financial consultant about establishing a plan that incorporates your income, your responsibilities, and your hopes and dreams. Financial planning will help you identify your goals and create a strategy for achieving them. "Get yourself on a budget reduce your monthly expenses as much as possible," recommends Bakke.
- Increase your home's value. Renovations are a great way to up the value of your home. Think about permanent improvements like adding more square footage and modernizing your kitchen and bathroom. These are likely to be more attractive to buyers than putting in a pool or hot tub.
- Consider refinancing. Not sure if now is the right time to refinance? Talk to your financial consultant about your options. A few rules to live by: If you can save 2 percent or more over your existing mortgage by refinancing, and your credit score is 740 or above, refinancing may be a way to put much-needed money in your pocket.
The content provided is for informational purposes only. Neither BBVA .Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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