Gen-Xers Show Traditional Financial Values, but Have too Much Debt

In a press release, Schwab said Gen-Xers have often been labeled as “slackers” and were assumed to have rejected the traditional working-class lifestyle, but the study found almost two in three (64%) respondents say they are focused on attaining the American Dream of family, home ownership, and financial security. Almost two in five (39%) indicate they would like to attain the lifestyle enjoyed by the financially successful people who surround them.

Two-thirds (66%) of respondents admit to thinking about their finances on a daily basis, and nearly half (46%) also worry about the finances of their parents and siblings.

The problem is Gen Xers are saddled with debt. According to the release, almost 45% say they have too much debt to even think about saving or investing, and more than a third (35%) think they will be in debt for the rest of their lives. Forty-seven percent report they live on a very strict budget with nothing left over to save. When asked if they are more proactive in saving for a vacation or retirement, 43% chose vacation.

Additionally many Gen-Xers lack trust in financial firms. More than half (51%) think that investment firms do not care about people like them – those who do not have a lot of money – and 46% feel that by turning to firms and advisers they might end up spending more money than they make.

The study of more than 5,000 Americans aged 25-40 found that younger investors generally fall into six distinct categories based on their mindsets and attitudes toward money:

• Paycheck to Paychecks - Representing 25% of Gen-Xers, members of this predominately female group are extremely stressed about their personal and professional lives. They are less confident than any other group about having a bright future, and are twice as likely to be unsettled and pessimistic about their financial situations.
• Spend Now, Pay Laters - Seventeen percent of Gen-Xers fall into this category of predominately city dwellers that tend to be optimistic, yet somewhat unrealistic about their futures. Overwhelmingly male (77%), this group is incurring significant debt, and believes Social Security will be there for them when they retire.
• Confident and Risk-Tolerants - Representing 15% of the overall Gen-X population, members of this group have high incomes, active lifestyles, and high levels of engagement in their financial future. They are more likely to be married, and believe that by taking risks they can reach lofty financial and lifestyle goals.
• No Money, No Worries - This group represents 15% of the Gen-X population. They are at the bottom of the earnings spectrum yet are very optimistic about life. They are more likely to be single, consider investing risky, and have the fewest number of credit cards. This group also has very little trust in financial firms or advisers.
• Cautious Savers - Approximately 14% of the Gen-X population, this group tends to be financially conservative and concerned about money, highly educated and financially secure, yet is late to adopt new products. They are also more likely focused on home and family than they are on having active social lives.
• Overwhelmed but Optimistics - Predominately female, these Gen-Xers have significant debt, adjustable rate mortgages, and high rates of financially-induced irritability or anxiety. Despite this, they manage to stay positive about their futures. This group represents 13% of the Gen-X population.

The Gen X Money Mindsets Study incorporates more than 2,000 online and face-to-face interviews nationally and an additional 3,000 interviews in America's largest cities.