3 Biggest Financial Errors — By Generation
When you need to make a major investment, who do you call? Your parents? Friends? Maybe a trusted teacher or religious leader? Most people look to their peers for financial advice, but if you do that, you may end up making some financial blunders – but you aren’t alone.
According to recent research, people of the same generation tend to make the same kinds of financial mistakes. A new survey from Financial Finesse, an education company, spoke with 11,000 people from the baby boomer, Gen X and millennial generations to look at their top money mistakes.
If you’re buying a home in the Capital Region at any age, here are the three biggest money errors people of each generation make.
Millennials
The survey found that 47 percent of millennials do not have enough money to cover their expenses should they lose a job or have a medical emergency. Another 40 percent have enough life insurance to replicate their income if an accident lands them in bed and unable to work, and 83 percent had 401Ks.
This doesn’t exactly mean the millennials don’t care or don’t plan ahead. Some of this may be a product of the economy. Some industries are relying more heavily on freelancers versus full-time employees. With rising rent and food costs, it is harder for some millennials to stretch those entry-level salaries into their bank accounts.
Gen X
The Gen Xers were better about saving long term, but they had more problems with managing their day-to-day spending habits. Survey takers often cited their family priorities, which were starting to change, along with their time constraints as reasons for poor spending habits (who has time to walk when you can take a taxi?).
About 53 percent of the Gen X survey takers paid off their credit card balance each month. Twenty-one percent added that they checked in with their partners to decide on an aggressive investment strategy. While those strategies can make you big bucks, you can also lose big as well. If you’re close to retirement, an aggressive strategy can ruin an investment, and with little time to build it back up, Gen Xers may be facing major financial problems.
It’s hard to fault them too much. Eighty-three percent of Gen X survey takers had 401Ks, yet only 17 percent felt confident that they would eventually meet their savings goals.
Baby Boomers
For many baby boomers, preparing for their later years seems to be the most troubling money problem. Of those surveyed, only 16 percent had help such as long-term care insurance. Another 65 percent also anticipate working past the current retirement age (65).
The truth is financial problems can happen to anyone, no matter how smart or savvy you are. Being laid off can throw a monkey wrench into your financials, and if you can’t find a job, you may have to go through all of your savings.
The best thing you can do is try to prepare for the absolute worst. No matter how old you are, saving should always be a priority, whether it’s in a savings account or a 401K. Owning your own home is an investment itself. Real estate in the Capital Region can be a great market to invest in, and once you pay off your mortgage, you’ll be able to live rent free.