Right now there are six distinguishable generations alive:
(1) Greatest Generation, people born from 1900-26. We are at the precipice of the disappearance of persons born in this generation. Too little cash-at-hand was the moniker of these people.
(2) The Silent generation (Traditionalists), people born between 1927-1945. This article will not include discussion of these people, as their financial habits were not unique from their parents.
(3) Baby Boomer generation, those born between 1946-64. This enormous in number group became mega consumers by learning to use credit (excessively,) changing the way they financed their appetites for a never-ending supply of retail products.
(3) Generation X, born between 1965-83. This essay will not include comments for this group, as they merely adopted the same, some good and some bad, financial consumption habits of the previous Baby Boomer Generation.
(4) Generation Y, Millennial generation, born between 1984-2002. This group is recognized as unique from the previous two generations, not only using more credit, but using it earlier and without a plan for repayment.
(5) Generation Z, the Digital Generation, those born after 2002…Enough time has not elapsed to judge the financial habits of this generation, but it is probable that they will be an extension of the Millennial generation.
Without discounting the existence of the Silent Generation, the Generation X or the newest on the scene Generation, let’s look at how persons in each of these generations: Greatest Generation, Baby Boomer, Millennial, have dealt with financing their own lives. It is these three that have financial behaviors that are uniquely distinguishable from each other.
The first of these is The Greatest Generation, so named by Tom Brokaw in his recent book of the same title. All of the their Baby Boomer children have heard their stories of the Depression and World War II so many times , many actually believe they lived through them! This was definitely a “cash and carry” crowd, probably to a fault. Living through the ’30’s Depression without credit cards or access to other institutional lending choices forced these people to pay-as-you-go for virtually everything.
Too much individual suffering during these desperate financial times and feeling the pain from the second traumatic American event in their lives, World War II, stimulated this generation to vote for government assistance programs like Social Security Retirement and Disability, Guaranteed VA health insurance and college assistance, and the crowning glory of Medicare. Remember that Medicare was a product of this Greatest Generation, as the Baby Boomers were not yet at an age to enter the voting booths in 1965. When recalling the distress these people encountered during these two terrible American events, we can can agree that this generation did indeed “pay forward” for the government benefits they legislated and eventually enjoyed.
After the Greatest Generation’s second tragedy, WW II , the Baby Boomers showed up. Their children, the Gen X’ers & Y’ers, are justifiably sick of the listening to their Boomer parents stories about growing up in the care-free ’50’s or being part of Woodstock’s sex-drugs-rock & roll ’60’s. This generation caused Marketing Departments to blossom in America. Starting with Proctor & Gamble commercials on early TV shows (soap operas) and progressing to offering senior living choices, uncountable companies have tried to appeal to the buying habits of this massive 76 million number of people.
Starting in the 1960’s, while still in college, the first in this generation began to learn about credit. Innumerable choices for borrowing for college, retail purchases, cars, and housing emerged. This generation converted from “cash and carry,” taught to them by the previous Greatest Generation of parents, to a “pay later” habit of consuming. Just as too little credit was a liability for their parents’ financial stability, too much credit became a financial liability for the Boomers. Ultimately, too many of them lost their houses or ended up in bankruptcy (a taboo to be avoided at all costs by their parents) when the first financial crisis appeared.
Lastly, the children of the Boomers arrived, this current combination of Gen X’ers and Y’ers. Without trying to differentiate the sociological differences of these two unique groups, let’s look at the way the latter ones, the Millennial, view financing their lives. It seems that they have been convinced, en masse, to accept massive debts before they even graduate from college. Combining this with the unparalleled expense of buying houses, cars, & on-the-go food choices, and keeping up with owning the newest electronic gadgets, it seems possible that far too many of this Millennial group may never get out of debt. Recently, a significant percentage of them are disappointingly beginning their careers in either part-time work or with no job in sight.
The same level of opportunities may not seem as evident to these persons as when their Baby Boomers parents looked for employment and seemingly could show up at a job interview and “simply make fog on a mirror” to get hired. The new norm for this Millennial generation is living at home into their ’30’s, allowing their parents to keep them on the company health insurance until they age 26, staying on the family auto insurance policy as long as the agent allows, using the family cell phone plan, and expecting to receive some kind of help with first their house down payment.
While the financial pages list many new 20’s aged “tech billionaires,” and those that studied math-engineering-science-tecnology are doing fine in the workplace, it seems certain that the new moniker for the Millennial Generation will become the “pay never” crowd. History may record that too many of them had no opportunity to pay forward or even pay later, as their helicopter-parents did virtually everything for them as they grew up and that they were given too much support when the financial-job crisis of the last five years arrived. This generation has watched banks, insurance companies and auto manufacturers be bailed out from too much debt. They are digesting that people in bankrupt Greece and Detroit are still somehow afloat and continue to receive promised pensions and other government assistance.
Perhaps they should not be faulted from expecting that some miracle will eventually bail them out.
This Side of the Street 