Leslie Kennedy and her husband have just purchased what she calls their “forever” home: a detached house just outside of Toronto that’s a step up from the pair’s current condo—size-wise and money-wise. The editor and mom of two admits she’s anxious about the accompanying financial pressure.
“I’m more nervous about it than excited about it,” says Kennedy, 35. Besides a hefty mortgage payment, the couple has daycare costs to cover, their kids’ future education expenses to think about, and credit-card debt to pay off. At this point, she can’t even contemplate putting money aside for retirement. “I feel like right now it’s one big juggle.”
Kennedy’s financial stress reflects what other members of her generation seem to be experiencing. Gen Xers appear to be having a harder time making ends meet than their younger peers, the Millennials.
According to Financial Finesse, a California company that provides workplace financial-education programs, Millennials are managing their finances surprisingly well despite having the lowest income levels compared to older generations. Gen Xers are having a more difficult time, struggling to address debt and establish sound financial planning.
The firm recently released a special report analyzing how different generations are managing their finances and found that those under 30 (the Millennials), are doing a fairly good job managing their cash flow, although they need a longer term perspective that makes planning for retirement more of a top priority.
People aged 30 to 44, meanwhile, who roughly correspond to Generation X, earn more income than Millennials but are finding it difficult to balance saving for retirement with the immediate needs of raising a family and paying a mortgage.
The report also found that late Baby Boomers (those aged 45 to 54) are faring better than Gen Xers with their day‐to‐day money management (even though they’re largely ignoring potential costs such as long-term care), while early Baby Boomers (55 to 64) are generally in the strongest financial shape across the board.
Financial communication key to success
Ottawa-based investment consultant and fee-for-service financial planner Stevan Dostanic attributes the Millenials’ money sense partly to the fact that finances –and related fears—are talked about more openly than ever.
“As the Boomers have aged, retirement planning is discussed more frequently and more publically than perhaps it was in the past,” Dostanic says. “Millennials may simply have a greater awareness of the importance of [financial] planning than members of Generation X had at that age.
In his experience, the biggest difference between generations is the types of questions they have.
“Younger clients often need advice on budgeting, debt management, or beginning a savings or investment plan,” Dostanic says. “At later stages, clients require advice on investing for their children’s education and tax-saving strategies as their salaries increase.
“While generational differences may have some impact on a person’s attitude towards money, many of these attitudes are transmitted from parent to child. Many of our younger clients are referred to our education services by their parents to help get them on the right track early in life.”
Liz Davidson, CEO and founder of Financial Finesse, meanwhile, says the report showed how different characteristics of each generation impacts people’s financial habits.
“When you look at the groups as a whole, you recognize that they are really dealing with issues stemming from perspectives and habits rooted in their generations,” Davidson says. “Millennials entered the workforce during a time when it was ‘cool’ to be thrifty. Gen Xers lived in the shadow of the Boomers and have a generally cynical attitude toward achieving their goals.”
Kennedy says her strategy is to take things one step at a time.
“Our goal is to have less debt,” she says. “Sometimes financial choices have to make the most sense for where you’re at in life right now,” she says. “Right now we’ve chosen RESPs over RRSPs. Once the kids are out of daycare we can shift some of that money over. Our focus is really on the here and now.”