Millennials and more: how the generations relate to money

"What year were you born?" This simple four-digit number can reveal a lot about a person's attitudes toward money, spending and payments. Why? Because habits and preferences are shaped by life experiences. And-while everybody's different-people the same age have often had many (though not, of course, all) of the same experiences.

Some generational names (like "Baby Boomer", "Generation X", "Millennials") are widely used around the world as social and cultural zeitgeists. While the concept of social generations is a largely Western notion, generational naming is not unique to the developed West. For example, in South Africa, people born after the end of apartheid in 1994 are referred to as the "Born-Free Generation".

By understanding the characteristics and motivations typically shared by members of the major generational groups, financial institutions can be more prepared to offer them the services they want in ways tailored to their wants and needs.‍

Baby Boomers (born 1946-1964)‍

The generation and the financial services consumer.‍

In the US and Europe, a "baby boom" happened after World War II, when soldiers went home after winning the war excited to start young families. There was also a baby boom around this time in some developing countries, among them Morocco, China and Turkey. This generation takes its moniker from that historic trend, but it's also sometimes called "Gen W".

Understanding Baby Boomers

People born in these countries between the mid-1940s and the mid-1960s tend to value financial security. They might remember times of high inflation and economic uncertainty, leading to a cautious approach.

In the workplace, Boomers tend to pride themselves on their work. They're often competitive. While many Boomers are retired, others are working up to and into retirement-because they like working, need the money or both.

Spending habits

When it comes to spending, Boomers tend to be more budget-conscious than other generations but are loyal to brands they trust. Unlike younger generations, who favor deals over brands, they're willing to pay more for their favorite brand of laundry detergent (it might be the one their mother used) and their favorite restaurant chain.

And while Boomers are increasingly comfortable with digital payments, only 12% of them are early adopters of technology compared with nearly double that (21%) among Gen X. Most Boomers prefer cash for small transactions like tipping or everyday purchases. They might carry $50 to $100 in cash.‍

Investing behaviors

Baby boomers have the largest percentage of their wealth in stocks and mutual funds. According to Federal Reserve data, about 28% of their wealth is in this category. The second-largest portion of baby boomer wealth-equal to $18.65 trillion-comes from real estate ownership. Boomers have significant accumulated wealth, partially from real estate, that some experts expect a $53 trillion transfer of wealth over the next couple of decades as they leave homes and other assets to younger generations. In fact, you may increasingly find members of those younger generations involved in their parents' financial planning.

‍Attitudes toward saving‍

The typical Boomer might feel uncomfortable discussing salaries and retirements savings-when they were growing up, talking about money wasn't something grownups usually did. This reticence may be in part because fewer of them have pensions than their parents did, so despite their relative wealth, they worry that they haven't saved as much for retirement as they should have. ‍

Impact of the Baby Boomer generation‍

When the Baby Boomers entered the world, it was like "a python swallowing a pig," wrote the author Philip Bump. The Boomers' massive size and timing-not just right after World War II, but for the decades that followed-meant cultural and economic dominance for much of their lives.
Boomers want to be able to stop by their financial institution when they have a question or need help. They like traditional person-to-person service when it comes to their money and they want their primary financial institution to offer it.

And many Boomers are not only comfortable with digital, half of them-more than any other generation-say the ability to open accounts online would create a better digital banking experience for them. What's more, 22% say they use their primary financial services apps two to six times a week-only a few less than Gen Z, at 29%.‍

Gen X (born 1965-1980)‍

The generation and the financial services consumer.‍

Gen Xers, who came of age during a period of economic stagnation, tend to value practicality and self-reliance. They watched their parents struggle financially, so they want to be financially stable.

Understanding Gen Xers‍

Gen Xers work to live, they don't live to work. They tend to be self-sufficient, results-oriented and hard-working. They typically like a challenge, appreciate creative input and embrace technology. As professionals, they're independent and value a balanced lifestyle, so they're likely to want to work remotely-and free snacks at the office won't change their minds. ‍

Spending habits

Gen Xers tend to spend their money carefully, with a focus on value and functionality. They're generally more budget-conscious than the slightly younger Millennials. They use bothcash and digital payments but might carry a bit less cash than the Boomers: around $20 to $50 for everyday needs and tipping.‍

Investing behaviors

As Gen Xers approach their retirement years, many worry that they lack enough savings and time to invest to continue building those savings.

Gen Xers may be more willing to take risks in the stock market because they remember the strong markets and hedge funds of the 1990s. However, others say that Gen Xers may be concerned about inflation, reinvestment risk, and longevity risk when considering investments.

Attitudes toward saving

Gen Xers, on average, started saving for retirement at 36-much later than the generations before and after it. (Millennials started at 27, Gen Z at 20.) Gen Xers are often called "the sandwich generation" because they tend to be both caring for their aging parents and raising their own children. A study by the Pew Research Center shows that 54% of Gen Xers both have a parent over 65 and are currently raising a child or supporting an adult child financially. This can put a significant strain on their finances and time. In keeping with the traits of their generation, Gen X tends to be careful, steady and prudent about saving as they eye retirement.

Gen Xers are comfortable talking about money with close family, but dishing about salary packages with friends might be a bridge too far.

Impact of Gen X

‍This generation has witnessed and contributed to important developments in technology, from the rise of personal computing to the birth of the internet and beyond. Their balanced approach to technology distinguishes them in today's tech-centric world.‍

Gen Xers as consumers of financial services‍

Gen Xers feel less financially secure than any other generation. Making their own choices makes them feel in control, so they want to steer their own ship in all things, including managing their money. They'll make sacrifices to maintain that independence.

Yet Gen Xers can be a growth segment for financial institutions: many are in their peak earning years at the same time that they're growing more concerned about making sure they'll have enough income in retirement. They're also increasingly open to changing up their financial services provider: 35% say they're open to considering a new primary bank and 61% say they're looking to add at least one new financial services product this year.

Millennials (born 1981-1996)‍

The generation and the financial services consumer.‍

Millennials, sometimes but not primarily called "Generation Y" or "Generation Why" because they tend to question norms, are now the largest generation in the world: 23% of the global population or about 1.9 billion people.

‍Understanding Millennials

‍Millennials entered adulthood during the Great Recession and were between the ages of five and 20 when the 9/11 attack happened. Statistically, Millennials don't have (and aren't projected to have) the wealth of older generations-and they feel that. Ask them if they think the Boomers prospered at their expense and they'll likely say yes. But they're a practical generation, taking steps to become financially secure despite this handicap.

By 2025, 75% of the global workforce is projected to be made up of Millennials. And Millennials want jobs where they can learn skills and advance their careers. They tend to stay with an employer longer than other groups if they feel they're being treated fairly and have a sense of purpose and opportunities to grow, but if they don't feel this, they're likely to move on. They like knowing what to expect.

‍Spending habits‍

Millennial spending accounts for 28% of all daily per-person consumer spending in the US an average of $85 a day per Millennial. This percentage is expected to reach up to 35% over the next 15 years. Because they value experiences over material possessions, Millennials tend to splurge on dining, entertainment and travel. Like the Boomers, they tend to be brand loyal. Though they're highly comfortable with digital payments and mobile wallets, they might carry a little cash, maybe $10 to $20, primarily for tipping.‍

Investing behaviors‍

Millennials are paying off the past and saving for the future simultaneously. Sixty-four percent of millennials have investments, with the most favorable form being crypto, according to an Investopedia study.‍

Attitudes toward saving‍

While Millennials have a reputation for being big spenders, they're actually saving for emergencies and retirement at higher rates than other generations. They're optimistic about their financial futures yet practical about what it will take to get there.

This generation is moreopen about discussing money with friends and family than earlier generations, often using online resources for financial advice. They're willing to take on debt if it helps them meet their goals, but they also say they feel burdened by it.‍

Impact of Millennials

‍As the first generation to grow up with the Internet, Millennials have been described as the first global generation. This generation is comfortable using the internet, mobile devices, social media and technology in general.‍

Millennials as consumers of financial services‍

Millennials are confident about their ability to manage their finances. They tend to prioritize interest rates when shopping for a loan.

Millennials lead the pack in online purchases. But despite an appetite for discretionary spending, their top three cost categories are housing, healthcare, and personal insurance. While these are the same categories that led their parents' lists, Millennials are paying 100% more on average for homes than the Baby Boomers did in the 1970s, plus the costs of living in general-for things like cars, college degrees, clothes and groceries-are significantly higher: since 2000, the price of goods has increased 67%, while earnings have increased a total of 7%, or a mere 0.3% per year.

‍Gen Z (born 1997-2012)‍

The generation and the financial services consumer.‍

Having grown up with technology (they may have played with their parents' smartphones as babies) and witnessed the student loan debt that burdens their predecessors, Gen Z is financially conservative and prioritizes financial wellness.

‍Understanding Gen Z‍

At work, Gen Z thrives in egalitarian environments. They value consensus and do their best work for leaders who see themselves as facilitators, not authoritarians.

‍Spending habits‍

Gen Z has spending power of $44 billion a year and isn't afraid to use it, according to research from Uniquely Generation Z.

Financially responsible, Gen Z prioritizes lifestyle and social causes over material possessions. They might be less likely to splurge than Millennials, but they aren't afraid to spend their money on things they consider important.

They're comfortable with alternative payment methods.

If you'd expect Gen Z to be all digital, all the time when it comes to purchases, you might be surprised. Though they grew up with digital payments, Gen Z is embracing cash. A 2023 Harris poll found that 69% of Gen Zers in the US and UK said they used cash more than they did the year before, and in two early 2024 studies, 23% and 37% said they use cash for most of their purchases. While the study didn't ask "how much cash do you carry," it's likely around $20 to $50, with individual cash purchases hovering around $15 to $20.

For many Gen Zers, because they're leaning into cash, they're keeping large amounts of it at home, according to a recent report by Credit Karma. A practice called "cash stuffing", a budgeting hack where cash is stuffed into envelopes, has also been trending on Gen Z's social media feeds. Influencer videos show how to use envelopes to designate "buckets" of money for expenditures like eating out, clothes, holidays, etc.

Many Gen Zers also say they are likely to adopt online payment apps, so it's fair to say this generation uses a variety of purchasing tools.

‍Investing behaviors‍

73% of Gen Z own stocks, making them the most common type of investment for this generation, according to a Lexis Nexis survey. The same survey found that a whopping 47% own crypto stocks, 15% are using exchange-traded funds, 30% hold bond investments and 22% buy index funds. They also tend to buy stocks they like personally. For example, a US News & World Report survey found that the number one public-owned brand for this group was Starbucks followed by Chipotle Mexican Grill and Nike.‍

Attitudes toward saving‍

Gen Zers tend to be super-savers, starting early, saving more and maxing out their IRA matches-in some cases, because they're convinced government retirement programs won't be there for them. They also tend to be very comfortable discussing money with peers.‍

Impact of Gen Z

‍Gen-Z is the most ethnically and racially diverse generation in history. Additionally, growing global exposure through the boundless realms of digital media has cultivated a robust appreciation for diversity and inclusivity.‍

Gen Zers as consumers of financial services‍

Gen Zers are comfortable using online resources for financial education. Yet despite their preference for digital solutions, nearly one in three Gen Zers cite human interaction as their preferred way to learn about finance. Understanding their proclivity for human interaction can help financial institutions optimize in-person and interactive teller interactions with Gen Zers. Understanding this can help financial institutions optimize in-person and interactive teller interactions with Gen Zers.

Though they're significant users of cash, they also tend to put their trust in financial institutions: the level of trust Gen Zers have that financial institutions will safeguard their data, for example, is far greater than the confidence they place in big tech. In all, 43% of Gen Zers say physical, bricks-and-mortar branches are important to them because they provide "peace of mind".

Roughly a third of Gen Z respondents in a US Statistica survey said they were worried about their financial future. Interestingly, 25%+ of respondents said they thought they were well informed about their financial situation. Few expressed interest in new financial topics, such as crypto or NFTs. Gen Zers want fast, easy-to-use digital services from financial institutions. By combining their physical presence with exceptional digital services that satisfy Gen Z's expectations for conveniences, options, sustainability and hyper-personalization, financial institutions can build long-term relationships with these up-and-comers‍

Gen Alpha (born 2012-present)

‍The generation and the financial services consumer.

‍Generation Alpha is poised to reshape the world as we know it. Expected to grow to 2 billion by 2025, this digitally savvy generation could turn out to be more resilient due to the economic, social and environmental challenges they face.‍

Understanding Gen Alpha‍

Inclusiveness is table stakes for Gen Alpha. They don't want to work just for a paycheck, instead, they'll look for jobs that align with their values.‍

Spending habits

Gen Alpha's financial habits are still being formed, but the concept of physical money might be less familiar. Expect their spending to be heavily reliant on digital payments. Carrying cash might be uncommon where the grid is reliable, though it is expected to remain more common where it isn't.‍

Investing behaviors

Gen Alphas are known to be vocal about social and environmental issues, so expect cause-based investments, or socially conscious investing, to be big with this new generation. But don't expect them to wait until they grow up-fintechs are already marketing debit cards and banking apps like GoHenry to children as young as six.‍

Attitudes toward saving‍

Education plays a crucial role in empowering Gen Alpha to make informed financial decisions. Financial literacy will likely be a bigger focus in their education compared to previous generations, with online learning so easily at hand. The vast majority of Generation Alphas-91%-believe financial knowledge and skills are important to meeting their life goals and 77% consider it "cool" to be financially savvy. As Gen Alpha matures, they'll seek guidance on topics such as investing, saving for college and managing a credit card.‍

Impact of Generation Alpha‍

With Generation Alpha, expect to see a new group of people who are more accepting of differences, more socially adept, tech-savvy, and perhaps more cognizant of complex issues like climate change. The second generation of digital natives, Gen Alphas have never been without smartphones or social media. They are drawn to authenticity, interactivity and gamification.

Gen Alpha is expected to be the most highly educated generation ever. Within the next few years, they will outnumber the Baby Boomers, and many of them will live to see the 22nd Century.‍

Gen Alpha as consumers of financial services

Gen Alpha is expected to be the most populous generation ever, with the oldest members entering adulthood in 2031. That gives financial institutions valuable time to calibrate their marketing and relationship-building strategies to appeal to this generation. By 2029, Gen Alphas' global spending power is expected to reach $5.46 trillion, according to research-based advisory firm McCrindle. While they are the youngest generation, they have brand influence and purchasing power beyond their years and are unquestionably digital first.

Gen Alpha is focused on digital-native experiences that not only embrace technical innovation but can employ that innovation in increasingly meaningful and embedded ways. Keeping up with the changing expectations of this new generation is the key for financial institutions to build experiences that are evergreen. To meet the needs of Gen Alpha, it is vital to consider how this generation approaches financial technology and what financial priorities they possess.‍

Key findings‍

Understanding the attitudes of generational consumer groups can be highly valuable in understanding your customers. But the data on this is complex and full of surprises; simple, straight-line trends are few and far between. For example:

• While Baby Boomers didn't grow up with modern technology, many of them embrace it
• Millennials save more than any other generation (an average of $535.50/month).
• Gen Z is more likely to ask a family member for money than to use a credit card to pay an unexpected bill or expense; Millennials are the opposite.

But we're more the same than we are different. Savings rates are low while use of credit is high across all the generations, according to the MarketWatch Guides Generational Banking Trends Report (2024). Members of all generations are mostly likely to seek financial help from family and friends than from a financial advisor, online resources or any other source. And though options for managing their money proliferate, trust in financial institutions is holding steady at 70% across the generations.

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