Gens under the lens: The Gen X consumer

Tearsheet is running a new series, Gens Under the Lens. It’s a look into the evolving financial archetypes of the generations -- from Boomers to Gen X to Millennials to Gen Z. We look at the current research into their beliefs and habits, giving a sharper view for marketers and product people to better understand what drives today’s financial services customers.

The term “Generation X” was a textbook sociology term before it being popularized by author and journalist Douglas Coupland in his 1991 novel, Generation X: Tales for an Accelerated Culture. 

The book tells the story of a group of young people, frustrated with being misclassified as Baby Boomers and the outlook handed down to them: “We're sick of stupid labels, we're sick of being marginalized in lousy jobs, and we're tired of hearing about ourselves from others.” 

Gen X archetype

Gen X is the generation of Americans born between the mid-1960s and through the 1980s. Children to the Silent Generation and Baby Boomers prior, and parents to Millenials and Gen Z, Gen X are infamously the smallest of all the generations. 

Often, they’ve been left out, forgotten, and overlooked by society and its inner structures, including financial services (however, 'the forgotten generation' is due for a rebrand, as they’re projected to outnumber Baby Boomers by 2028).

Today, Gen Xers are aged 40-55, well in the middle of their lives and careers, and many (73%) of them are married or living with a partner. 

Gen Xers are also known as the ‘latchkey generation’ -- the first to grow up in dual-income or single-parent homes, with minimal adult supervision and early-learned self-sufficiency. Notably, this instilled values in them of independence, responsibility, and a work-life balance.

Growing up in the 1980s meant two things: being born into an economic recession and the rise of technology. 

Economically, they entered a world of broken promises in the shadow of the most severe global recession since WWII, marked by high unemployment, inflation, and an all-around crisis in the financial industry.

From a technology standpoint, Gen Xers were at the forefront of the transition from analog to digital. They were the first to grow up with personal computers, cellphones, the internet, and the opportunity to navigate an alternative, online world. 

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While excessive or even obsessive internet use is typically attributed to younger generations, Gen Xers are right up there. Behind Millennials, Gen X has the highest internet user rate globally, mostly spent on Facebook and video content consumption. Much of their time is also spent with online retailers like Amazon, particularly researching prior to making significant purchases.

Money troubles: Why they worry

The 2008 crisis hit Gen X homeowners the worst, who at the time had the most to lose. But still in their prime earning years, they managed to make a comeback as the only generation to recover lost wealth after the housing crash. 

Today, they hold the greatest net worth, with households averaging $113,455. 

Still, they struggle. The latest recession, brought on by the pandemic, left 8.6 million Gen Xers unable to make ends meet. And according to the 2021 Personal Finance Index, Gen Xers face the greatest (28%) difficulty paying off their loans and credit card bills in full and on time every month.

What Gen Xers worry about most is debt. Nearly 40% of Gen Xers say that their debts hold them back from successfully addressing their financial priorities, and that they spend significant amounts of time worrying and dealing with financial issues. Over 20% of them spend at least 10 hours a week worrying about finances, and 13% of them worry for 20 hours -- both figures nearly double that of their parents.

As a result, 30% of Gen Xers find themselves dissatisfied with the current state of their financial lives. And 23% of them -- the highest of all generations -- do not believe they will achieve their long-term financial goals. 

Financial literacy: What they know (or don’t)

Financial struggles exist for many Americans across the age spectrum. How successfully people behave financially, against the backdrop of those struggles, weighs heavily on one’s financial literacy. 

The Personal Finance Index has consistently shown that financial literacy is linked to financial wellness, at all life stages. While financial literacy naturally increases with time, it tends to remain relatively low for Americans. 

In 2021, only 17% of Gen Xers scored in the upper percentile of financial literacy, with the majority (62%) scoring in the mid range.

On the bright side, improving one’s financial literacy is on the rise, and 44% of Gen Xers are motivated to become more financial literate.

The key to financial literacy is education. 58% of Gen Xers have received some type of financial education. Of the Gen Xers who were offered the opportunity, 30% made the choice to improve their literacy.

The Gen X Consumer: Saving, investing, and spending

In the peak of their earning -- and most expensive -- years, Gen Xers are the busiest of all. They’re balancing careers and households, sending kids to college while still paying off their own student loans, and caring for aging parents (oh, and mid-life crises). 

Their households are larger than average with the biggest spend on consumer goods and services, as well as big investments like homes and cars, totaling an average annual expenditure of $75,087.

While they’re the greatest contributing generation to the economy, they’re also the one with the most debt. According to Experian, they have the highest credit card ($7,236), mortgage ($259,100), and non-mortgage ($32,898) debt of any generation.

When it comes to investing, the majority (65%) of Gen Xers utilize a financial advisor for their investment decisions. They prefer full-service brokers or independent financial planners over bankers or accountants. Nearly half of them prefer their advisors to provide planning as well, with their key interests being retirement and tax plans. And as far as communication, they prefer to ask their questions over the phone, but receive their account performance reviews by email.

How Gen Xers feel towards financial services

When it comes to banking, Gen Xers bridge the gap between Baby Boomers and Millennials. Even though 39% of them were victims to fraud or identity theft, the overwhelming majority (91%) of them trust their primary financial services provider to protect them, and prefer their banks and credit unions to have branches -- even if they don’t use them. 

At the same time, 71% of them would consider banking with nontraditional players like PayPal or Amazon (compared to only 27% of Baby Boomers). 

As the first tech-savvy generation, they’re comfortable using digital channels, and 39% would be willing to share more personal information in exchange for more personalized services. 

Gen X want specific things from their bank. At the top of that list, and more than any other age group, is getting the best rates (39%). Right under that are lowest fees (37%), cash rewards (24%), and positive reputation (22%).

Financial tools and companies serving Gen Xers

According to Morning Consult’s survey of 2021’s fastest growing brands, of the 20 top brands for Gen Xers in 2021, Venmo and American Express came in 8 and 9 respectively, and challenger bank Chime came in 15. 

When it comes to cryptocurrency, the willingness of Gen Xers to both purchase Bitcoin and to do so via the Coinbase brand, has risen steadily.

Despite the spread of Buy Now, Pay Later services, only roughly 10% of Gen Xers think of BNPL brand Afterpay favorably. 

Digital wallets like Square’s Cash App, however, increased in popularity among Gen Xers, both for its peer-to-peer payment services and online and brick-and-mortar merchant payments.

A look into Gen Xers’ future

There’s a ‘great wealth transfer’ taking place now and over the coming two decades. Roughly $68.4 trillion from Baby Boomers will be passing on to their heirs. Of that, Gen X is predicted to inherit more than half (57%) with the rest going to Millenials.

This changes things for the financial industry in a big way. Gen X (with Millennials at their heels) expect different things from their banking providers, and they think about money differently than their predecessors. 

Having witnessed multiple economic downfalls in their lifetimes, this generation is notably characterized by pessimism and skepticism. They know that working hard and stashing acorns in a traditional FI is not a foolproof way to secure their future.

They know this because most of them have come nowhere near where their parents were at their present age. “There’s a massive humbling in that,” said Zack Miller, Gen Xer and Tearsheet’s editor in chief.

Still, they strive to educate themselves, increase their financial literacy, and they’re not afraid to try new things when it comes to banking.