Gen X and Gen Y: The Unpredictable Spenders

Anna Williams

Gen X Gen YThere’s certainly been a lot of buzz lately about how the generations differ—from work personality and career moves to charitable giving.

Now, a trio of recent reports also tries to provide some insight into how the groups diverge when it comes to managing—and investing—their wealth.

Three major financial institutions—Fidelity, U.S. Trust and Pershing—recently released studies on how investors in Gen X and Gen Y, or those in their 20s-40s, compare to baby boomers.

In particular, the reports found that members of the younger generations are surprisingly actively engaged in money management.

How the Younger Generations Differ

According to Fidelity’s Millionaire Outlook report, 72% of the Gen X/Y group (with an average age of 37 in the study) said they find joy in investing—that’s versus only 37% of baby boomers surveyed. And the younger generation not only seems to enjoy investing more, they also are generally more optimistic about the market’s future outlook as a whole.

But compared to baby boomers, Gen X/Y-ers are more likely to spend their money freely. Among millionaire members of Gen X/Y, 91% acknowledged they feel wealthy—compared to just 74% of the older generation. And the younger group also was considerably more likely to own vacation homes and boats, as well as to choose to fly first class.

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Also, members of Gen X/Y seem to have no problem asking for help. In the Fidelity report, investors in Gen X/Y were found to be more likely to turn to financial advisers for investment ideas than any other source, like friends or family. And while only 68% of Boomers work with an advisor, almost all (92%) of Gen X/Y millionaires choose to do so.

As The New York Times reports, these studies found that younger investors also have a special interest in using their investments to simultaneously pursue philanthropic interests.

And despite their high spending on luxury items, Gen X/Y investors are at least planning ahead: More Gen X/Y investors were interested in getting a plan in place and tracking their progress to make sure they achieve their financial goals.

  • CrankyFranky

    guessing having a relatively rich, comfortable and relaxed upbringing by baby boomers parents from whom many of Gen X & Y will hope to inherit their home – naturally contributes to a greater feeling of freedom and willingness to take risks

    growing up in the 1920-30′s depression, where my grandfather left home for months to walk from farm to farm asking for work to support his 2 small daughters left at home with his young wife – I guess would give you a whole other mindset about risk – next meal being highest item on the agenda …

    • Gen X

      I’d say take a look on wikipedia, or do some reading for a primer on Gen X childhood. Do some thinking on the matter.

      Suffice to say, we grew up critical and distrustful. Far from “relaxed and comfortable”. When we’re optimistic, it’s because cynicism is pointless. We made a choice. We are the dance band on the Titanic.

      Gen Y (our siblings) are the opposite of us in most ways. They grew up in the 90s, in the “New Economy” which was our rebellion against Reagan Era dishonesty. Optimism is part of their core… like Smurfs.