Mind the Generation Gap

Baby Boomers are renowned for their strong work ethic and competitive nature. They’re usually resourceful and disciplined with their money – they’ve had to be! At the age of 23, they saw the highest ever recorded interest rate of 17%, followed shortly after by the highest UK unemployment rate at 11.9%. It wasn’t until age 41 that Baby Boomers could access online banking for the first time. Question is: Did these events have an impact on their personal finance journeys?

View Baby Boomers’ tube map

As you can see:

• Baby Boomers tend to be late adopters of financial products, like credit cards, car finance, even pension contributions. They tend to only do things when they need to
• many milestones accumulated when Baby Boomers were in their 30s, and as the costs of their children, car and house rise to more than they can afford, a loan was likely needed to support their lifestyle
  
• when ISAs launched in 1999, Baby Boomers in their early 40s were uncharacteristically quick to open their first ISA and take advantage of their tax-free savings allowance.
  

Conversational tips for Baby Boomers:

• when discussing money with younger generations, remember that late settling doesn’t always mean irresponsibility
  
• the availability of financial products has dramatically increased, and if credit is used carefully – it can have a positive impact on people’s lives.
  

Generation X tends to be self-sufficient. As a group, they appreciate their freedom but don’t shy away from responsibility – so if they hit a bump in their financial road, they’ll always try to find a way to solve it on their own. Just before Generation X began their studies, student loans were introduced. And in their early-mid career, the international banking crisis caused the Great Recession of 2008. Is there a knock-on effect for Generation X’s personal finance journeys?

View Generation X’s tube map

As you can see:

• credit is a way of life for this generation – often spending on holidays and a car. They’re happy to use credit for enjoyment, as well as necessities
• although the 2008 recession hit at an important time in their lives, the impact of Coronavirus and Brexit is felt during a quieter period. Starting a family, making a career and buying a house are behind them. Retirement, children leaving home, and paying off their mortgage are all still to come.  

Conversational tips for Generation X:

• don’t feel uncomfortable about sharing your wisdom about credit and encouraging a responsible approach to borrowing
• although Coronavirus and Brexit may have impacted your finances, you might not feel the impact as severely as future generations, due to where you are in your financial journey.

Many Millennials are confident, ambitious, adventurous, and not afraid to question authority. The Great Recession of 2008 hits very early on in their personal finance journey. After this, Coronavirus measures then caused a historic drop of 9.9% in Gross Domestic Product (put simply, a measure the value of the UK’s economy). Combined with the UK leaving the EU at the beginning of 2020, it’ll be interesting to see how our now 31-year-old Millennials will navigate their financial future…

View the Millennials’s tube map

As you can see:

• the Millennial generation are now in a phase where many life events are starting to happen: having children, getting married, eyeing up their first home
• compared to other generations, the differences in personal finance journeys within the generation itself are interesting. There are two clear groups: those who settle down early (around age 25) and those planning to settle down later in life
• as Millennials reach adulthood, there is a wide variety of financial products available – especially compared to previous generations. Despite this availability, many of their major financial decisions are delayed until after university.

Conversational tips for Millennials:

• don’t feel rushed if your friends seem to be hitting money milestones before you do – even within your own generation, personal financial journeys look very different
• that said, don’t forget to celebrate the successes of your friends (even if they look different to your own).

Gen Z have grown up as ‘digital natives’ – with technology managing many parts of their life. Diversity and open-mindedness are the norm for many of those in Gen Z, which means they’re pragmatic and progressive, in their financial and social lives. The Government Debt Crisis and Brexit Northern Ireland Crisis are predicted to hit very early on in Gen Z’s professional career – and right now, there’s no telling what impact this will have on their financial future.

View the Gen Z’s tube map

As you can see:

• this is the first generation to grow up with mobile banking as the norm
• Gen Z seem to adopt financial products much earlier than any other generation – however they plan to buy their first home later than you might expect
• with the impact of Brexit and Coronavirus, it’s a tricky time for Gen Z to be entering the jobs market – but they do have a long future ahead, and there is time for recovery
• Gen Z will be auto-enrolled in their workplace pension schemes, which could ease the worry about their long-term financial future.

Conversational tips for Gen Z:

• if you’re not feeling heard in a financial conversation, it may be because your generation adopts new financial products much earlier than previous generations – older people may not have been in a position of choice at your age, but if your finances feel right for you, you’re probably doing the right thing
• older generations might not relate to your early decisions, but that doesn’t automatically mean you’re making the ‘wrong’ decisions.