Generations are already recognized as distinct concerning values and convictions. These disparities may extend into the financial domain, as indicated by a recent research conducted by the University of Georgia.

Financial wellness signifies an individual’s capability to withstand financial difficulties and fulfill their objectives. Should financial wellness be inadequate, there can be adverse effects on one’s mental wellness.

The scholars analyzed data from the 2016 Consumer Financial Protection Bureau’s National Financial Well-Being Survey. This analysis emphasized the fiscal understanding, abilities, and behaviors of three distinct cohorts: baby boomers, Generation X, and millennials.

“Our focus was on the variations in the connections among financial understanding, ability, and behavior and the financial wellness of these three cohorts. This aims to provide us with a more comprehensive insight into how individuals acquire knowledge and apply their skills differently across generations,” explained Lu Fan, the leading author and associate professor at UGA’s College of Family and Consumer Sciences. “They possess diverse life ambitions and priorities at varying ages.”

According to survey feedback, millennials exhibited lower financial wellness and knowledge levels, whereas boomers scored the highest. Financial understanding and monetary management competencies also typically improved with age.

Discoveries from this research could assist in formulating initiatives aimed at enhancing financial wellness across generations.

Personal experiences might influence financial wellness

The researchers examined numerous elements to evaluate financial wellness, including personal financial understanding. This encompasses both subjective knowledge—what individuals perceive they know—and objective knowledge—what they genuinely understand.

Crucial elements also include financial competencies, daily financial management, dedication to financial objectives, and consistent saving habits. Nevertheless, millennials frequently exhibited diminished financial knowledge and monetary management skills, which may adversely affect their overall financial wellness.

“Millennials indicated lower knowledge primarily due to their youth, as they are still in the learning phase,” stated Fan. “Boomers reported a higher level of financial knowledge, likely as a result of their life experiences and the learning opportunities they have encountered.”

Such experiences can differ; boomers might be learning not only through day-to-day life but also from significant national or global occurrences that could influence the values of an entire generation.

Programs could aid in enhancing financial wellness for all generations

Despite this overlap, Fan mentioned that particular elements exert more influence on a generation’s financial wellness than others. Millennials might gain more from boosting their objective financial knowledge compared to boomers, while boomers could enhance their financial wellness through improved monetary management practices and commitment to their goals.

The ability to establish and adhere to long-term financial objectives was also related to heightened financial wellness. Adhering to goals was crucial for all generations, but especially vital for Gen Xers, who need to strategize their spending during the lead-up to and throughout retirement.

Due to these differing dynamics, the study concluded that it may be more effective for financial advisors and educators to customize their initiatives for various generations.

“Millennials are confronted with numerous mid-life financial choices and long-term planning considerations, thus necessitating improvements in their financial knowledge, skills, and behaviors to attain a better financial wellness,” Fan remarked. “Most boomers are currently in retirement, making it essential to understand their financial needs and management behaviors during this life stage.”

The research was published in the International Journal of Consumer Studies and co-authored by Robin Henager.

The article Financial well-being varies across generations first appeared on UGA Today.