4 Ways Gen Xers Are Wasting Money and How To Stop It
Firmly planted in middle age, Generation Xers (people born between 1965 and 1980) are usually well into their careers, may own a home and are looking toward the next chapter of their lives.
The “latchkey generation,” however, faces unique financial challenges. As noted on Fortune Recommends, Gen Xers may be supporting both their aging parents and growing children. Saving for their own retirement, therefore, may play second fiddle to immediate needs.
While some expenditures for the generation may be unavoidable, others can be averted by smart planning and budgeting. Like other generations, Xers may find themselves wasting money on things that won’t help them gain wealth. We asked experts to help us understand where Generation X needs to stop spending so that they can waltz into a financially stable future.
Overspending on Housing
“Gen Xers may find themselves buying larger homes to accommodate growing families. However, it’s important to evaluate whether the size and cost of the home align with one’s long-term financial goals,” said Paul Serra, investor and owner of Elevated Fortune. He suggested they, “Consider downsizing or opting for a more affordable property to reduce mortgage and maintenance expenses.”
Mandy Cheung, CEO of Mandy Cheung Life Coach, agreed, “Real estate is a common area where many members of Generation X waste money. The mortgage, property taxes, and upkeep on the home consume a sizable percentage of their income. To avoid this, members of Generation X may want to think about moving to a smaller house or renting rather than owning.”
She encouraged individuals to keep home costs in check. “Gen Xers should acquire homes that are within their price range and accommodate their demands to avoid going into debt. If they are having financial difficulties maintaining their existing residence, they may want to think about renting or downsizing.”
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Serra also believes that Generation X spends too much on non-necessities. “Whether it’s frequent dining out, vacations, or shopping, lifestyle spending can quickly add up,” he said. “It’s important to strike a balance between enjoying life and saving for the future. Create a budget and allocate a reasonable amount for discretionary spending.”
Cheung agreed, “Many members of Generation X don’t make a budget or keep track of their expenditures, so they wind up spending too much money on non-essentials like eating out and going to the movies.”
“To counteract this, members of Generation X should begin keeping close tabs on their spending and drawing up a budget to see where savings might be made. They can also learn to save costs in other areas, such as grocery shopping and cooking, for example,” she said.
Serra believes Generation X spends far too much on their children. “While providing for children is a priority for many Gen X parents, overindulging them can strain finances,” he said. Instead, he believes that this generation should teach their children about the value of money and help them by setting reasonable spending limits. You can then encourage them to earn and save for what they want.
Putting Off Retirement Planning
If they haven’t started yet, members of Gen X need to start planning for retirement. “The education of their children and the health of their parents often take precedence over retirement funds for many members of Generation X. They may have to put off retirement or end up working longer because of this. To avoid this, members of Generation X should open retirement accounts with their employers or open individual retirement accounts (IRAs) as soon as feasible,” Cheung said.
She encouraged Gen Xers to save first for retirement, “Employer-sponsored retirement plans, including 401(k)s, and individual retirement accounts (IRAs) should be high on the list of priorities for members of Generation X when it comes to saving for retirement.” In order to do this she says they need to start saving immediately “to take full advantage of the compounding effect and increase their savings.”
Overcoming These Obstacles
“Ultimately, the key to financial success for Gen Xers is being mindful of their spending habits, having a clear financial plan, and consistently working towards building a secure and comfortable future. It’s about making intentional choices and prioritizing long-term financial well-being,” Serra said.
Cheung agreed, “Budgeting and keeping track of spending can help members of Generation X find places to make savings. They ought to cut back on extraneous costs like eating out and entertainment so that they can afford the basics like shelter, food, and transportation.”
She added that people should look for cost-cutting measures. “Shop for sales, use coupons, and compare prices to help members of Generation X stretch their purchasing power. People may cut costs on food, transportation, and other necessities by eating in, carpooling, and taking public transit,” she said.
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