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What you believe to be correct may not be the accurate money decision today depending on which generation you belong to.
Timing is one of the most important factors in money management. You might ask yourself: When is a good time to start saving? Which loans we pay off and when to pay them? How risky or conservative our investment decisions are and how long to wait? Each generation has faced different economic situations thus their money related actions should be different.
Gen Z
- Generation Z grew up during the recession, so saving money and investing early in their lives is quite important.
- They believe that technology is the best investment option because they were born in it. But over time and with rising interest rates, technology markets may be affected. The solution would be to diversify investments to avoid money mistakes.
- They believe the labor market remains strong. The short demand for services after the pandemic, may make them think that everything will remain the same, but should evaluate and improve their skills and continue interviewing and see what they are offered.
Millennials
-The high education, housing and health costs have made saving a difficult task for the Millennial Generation.
-They believe that they shouldn't take risks, but without good risk there is no opportunity for good profit. In order to avoid money mistakes, they should look for portfolios that adjust the composition of their investments as time passes.
-They think that financial independence is the key, but a couple must agree on what type of risk to take and must be aware of every detail of their investments over the years.
-They think they should be at the level their parents were when they were this age. The ratio of income versus cost of living has not been favorable for them. Be careful with overspending.
Gen X
-Generation X is the in-the-middle generation. They are actually taking care of children and taking care of their aging parents.
- They believe that they if they paid for their own education, their children should too. The cost of education has skyrocketed. If Gen X wants to pitch in for their offspring education, they should not undermine their retirement savings. Going too far on pitching in for their off spring's education could be a money mistake for Generation X.
- They believe that they should have their own home, but with the dot-com bubble, the real estate crash and the pandemic, homes have increased in price a lot. It may be more feasible to continue renting than to take on a 30-year debt that will keep them in debt until retirement.
Baby Boomers
-This generation benefited from the post-war boom and now enjoy good pensions, insurance and social security. But inflation may have affected some of their plans.
-They think they can pay off their mortgage before retirement, but instead of making a money mistake by paying off a low-interest mortgage, they should use the money in more profitable investments.
- They plan to shrink down. But, is it worth leaving their house to have the cash?