It’s tough being the middle child. By that, I mean Generation X. Those of us born from 1965 to 1980 — myself included – are wedged between Baby Boomers and millennials. And, let’s face it, they get all of the attention. With those two giant generations around, Gen X might as well not even exist.
Think I’m exaggerating? CBS recently left Gen X entirely out of a graphic it aired showing generation guidelines defined by birth year. There was the Silent Generation, born 1928 to 1945; the boomers, born 1946 to 1964; the millennials, born 1981 to 1996; and post millennials, born 1997 to present. Apparently, no one was born from 1965 to 1980.
Like a typical middle child, people only seem to pay attention to Gen X when we do something wrong. When it comes to our finances, it seems we’re doing a lot wrong. Just take a look at these headlines:
“Gen Xers Face Financial Challenges”
“Gen X Workers Are Financially Behind Millennials and Baby Boomers”
“Will Fear of the Stock Market Leave Gen X Broke at Retirement?”
“All the Ways Gen X Is Financially Wrecked”
And my personal favorite: “Reality Still Bites for Generation X”
Unfortunately, the statistics show that reality really does bite for Gen X. Consider these study and survey results:
- Generation X has more debt than any other generation, according to an analysis of consumer credit data by the credit reporting agency Experian.
- Nearly half of Gen Xers are living paycheck to paycheck, according to a survey by MetLife.
- Gen Xers are less likely than boomers and millennials to have enough savings to cover emergency expenses.
- Gen Xers are less likely than boomers and millennials to feel confident in their finances and are the most likely generation to say they’ll never retire, according to the MetLife survey.
There’s a good reason the generational middle child is struggling so much financially. Gen Xers are caught between supporting our millennial and post-millennial kids and caring for our aging boomer and Silent Generation parents.
But does that mean we should accept that we’re destined for a life of financial ruin? No. It’s time for Gen Xers to shake our slacker status and take control of our finances. Here are some ways we can do it.
Make Saving for Retirement a Priority
Most Gen Xers don’t have the benefit of a pension as older generations have had to keep them afloat in retirement. The onus has been almost entirely on us to build a retirement nest egg that’s big enough to get us through our golden years. But many of us haven’t made saving for retirement a priority. Instead, we’ve been putting our own financial future at risk to help support our adult children – not young children but those who are old enough to support themselves.
Parents are spending twice as much annually on adult children ages 18 to 34 than they are stashing in retirement savings — $500 billion versus $250 billion, according to a study by Merrill Lynch and Age Wave. Yes, that’s $500 billion with a “B” that parents are shelling out each year to help pay for their grown children’s rent, groceries, cell phone bills, student loans and even vacations.
You might think you’re doing your kids a favor by helping them out financially. But if you’re not saving enough for your future, you might have to rely on your kids to help you out financially as you age. Don’t do that to them.
Let your kids know that you love them but that you need to make saving for your retirement a priority now so that you don’t have to move into their basement someday. Then start putting all of that money you’ve been handing out to them into your retirement savings. In fact, meet with the HR department at work or log onto your retirement account to increase your contribution so the money comes out of your paycheck before you have a chance to spend it on your kids or anything else.
Ditch Debt
As I already mentioned, Generation X has more debt than any other generation – from credit card debt to auto loan debt to student loan debt. That’s right, we’ve even got millennials beat when it comes to student loan debt (in part, because as parents of some of them, we’re picking up the college tab).
So how does Gen X dig itself out of all of this debt? For starters, we have to stop racking up debt. The average credit card debt among Gen Xers is $8,467 compared with a national average of $6,445, according to Experian. Put away those credit cards and give yourself a weekly or monthly allowance just like you give your kids. That way you can only buy what you have the cash on hand to pay for.
Then start looking for ways to cut costs to put more money toward your debt each month. I’ve lived without cable TV for years and don’t even miss it. Rather than go out to eat on the weekends, invite friends over for a potluck. Instead of heading to the mall when you’re bored, head outside for a hike.
You might have to limit the number of extracurricular activities your kids participate in, tell them to get a job to make their own car payments when they turn 16, or stop paying their rent once they’re in the real world. You might even have to find ways to bring in extra income to pay off your debt quicker.
I know some of that doesn’t sound very fun – but being in debt the rest of your life won’t be much fun, either. Just think what a relief it will be when you no longer have a credit card bill, a car loan or student loan payment to make every month. Think how much more money you’ll have in your budget to spend on things you actually enjoy rather than on debt. Imagine what a debt-free life will be like, then think of that every time cut back on spending to put more toward what you owe or are tempted to pull out your credit card to pay for something you might not need.
Prepare for Emergencies
Everyone needs a cash cushion to cover emergency expenses. This is especially true if you’re a Gen Xer who is part of the sandwich generation. Not only do you have kids who are counting on you for support, but also you’re caring for aging parents. As a result, you face double the risk of emergencies popping up.
Your parent could end up in the emergency room just as easily as your kid could. Although you might not have to foot the bill for your parent, you might have to take off work to care for that parent. Or worse, you might have to stop working altogether if a stroke or dementia leaves your parents unable to take care of themselves. If you haven’t built an emergency fund or made a plan with your parents to pay for any care they might need, your finances could take a big hit.
I get that it’s tough to find extra room in your budget to save when you’re already financially stretched caring for kids and aging parents. But there might be spending cuts you can make that won’t feel like a sacrifice.
For example, reshop your auto and homeowners insurance policies to see if you can get a lower premium (you’ll likely be surprised by how much you can save). You also could boost your insurance deductibles to lower your premiums. Switch to a bank that doesn’t charge a monthly account maintenance fee. Ditch subscriptions and memberships you’re not using. For every expense you cut, set up an automatic transfer in that amount to a savings account. Then watch your emergency fund grow.
Taking these three steps – prioritizing retirement savings, paying down debt and building an emergency – will go a long way toward improving your financial security. Will it be easy? Probably not. But when has anything ever been easy for Gen Xers?
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I am the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. I also am an award-winning journalist with 20 years of experience writing about personal finance. My work has appeared in Kiplinger’s Personal Finance, Forbes.com, Yahoo!, MSN, and other online and print publications.