Who’s The Biggest Saver? A Quick Look At Generational Savings from 2023
As we look back on 2023, it’s clear that saving habits vary widely across different generations.
From Baby Boomers nearing their retirement years to Gen Z just beginning their careers, each group faces distinct economic realities that affect their relationship with money.
To learn more, let’s analyze last year’s savings trends of 2023 and see how each generation managed to stash away the most cash!
What Influences Your Savings Goals?
Before diving into each generation’s savings habits, what influences them in the first place?
Most of us adapt based on our unique financial situation, life stage, and future goals. A Boomer trying to save for retirement will definitely think differently than a Gen Zer just starting out in their career.
But the current financial troubles aren’t the only thing affecting how we view money.
Each generation has experienced specific events or financial traumas that significantly shaped its financial habits. For example, rising interest rates, inflation, and the post-pandemic economy have made most of us reflect on or drastically change our spending habits.
An Overview Of 2023 Savings By Generation
If you’re curious about how each generation did last year, let’s take a quick look:
Millennials
In 2023, Millennials have been buckling down and showing a solid commitment to building their financial futures, with a whopping $9,299.45 in savings last year.
Despite balancing the cost of homeownership, raising children, or caring for parents, they nonetheless led the pack in savings rates. Some factors that explain their saving habits include entering peak earning years, increased financial literacy, and more financial planning.
Gen Z
Gen Z is the newest part of the workforce, and they’re quickly becoming known for their saving skills. Their savings are right above the national average at $6,440.67.
Their saving strategies, from increased financial literacy to loud budgeting, have helped them create and work towards their financial goals. Even with lower incomes, their higher savings show they’re proactive about building a better financial future.
Gen Xers
Gen Xers found themselves in a challenging financial situation with only $5,132.20 in savings as of 2023.
Often referred to as the “sandwich generation,” many in this cohort need to juggle supporting older children or aging parents while preparing for retirement. While they have some savings, many are struggling to navigate these challenges, and only a slight majority report feeling confident about meeting their financial goals in the future.
Boomers
For Baby Boomers, 2023 is part of the cool-down phase of their financial journey.
Many are already retired or nearing retirement, focusing on maintaining their nest egg rather than accumulating more.
Their savings rates often reflected a shift towards safer investment vehicles and reduced discretionary spending, which explains the lower savings of $4,059.72. With some planning, many Boomers can stretch their retirement funds to cover increasing life expectancies and medical costs.
Practical Savings Tips Any Generation Can Follow
Having a healthy savings account is a must, no matter which generation you belong to. Here are a few practical tips that can help:
1. Start Your Emergency Fund ASAP
An emergency fund is the heart of a healthy financial plan. It’ll give you a buffer against unexpected expenses that could otherwise lead to debt or other financial problems. Starting this as early as possible and contributing regularly will help you prevent any unexpected surprises.
2. Reduce Any Unnecessary Spending
Everyone’s guilty of treating themselves occasionally, but don’t make it a habit. The more unnecessary spending you can cut from your life, the more you can put towards your savings goals. Start by canceling unused subscriptions, opting for cheaper entertainment options, or simply being more mindful of where your money goes.
3. Maximize Retirement Contributions
Maximizing retirement contributions prepares you for the future and gives you valuable tax benefits. Sign up for employer-sponsored plans like a 401(k), particularly where your employer matches your contributions, or try to start your own Roth IRA or IRA if you’re self-employed. The earlier you start, the more you can boost your savings!
The Bottom Line
2023 showcased a broad spectrum of saving strategies across different generational lines. But despite the challenges, most Americans are still confident they’ll meet their savings goals.
Remember, regardless of your generation, there are many ways to start your financial journey. You can build a financial nest egg without issues with patience and a sound financial strategy!
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