What your employees think about finances, depending on their generation

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Devin Miller
October 13, 2022

To support your employees’ financial wellness, you need to understand how they view finances – and that varies along generational lines

People want to feel financially secure. They want to enjoy their lives. They don’t want to constantly worry about money. As an employer, you play a significant role in your employees’ relationships with money. The wages you pay them impact their financial situation, but it isn’t the only factor that deserves consideration.

Employees’ financial literacy levels dictate how they handle money, and people with low financial literacy tend to have low levels of financial wellness. They’re more stressed about finances and in turn, less engaged at their jobs. If you want to support your employees (and in turn, your organization), you need to foster their financial wellness

But what approach should you take? To find the answer, you need to get to know your employees’ unique needs and concerns. This varies from individual to individual, but it also varies along generational lines. Take a look at how different generations view finances and savings.

Emergency savings

According to the Paycheck-to-Paycheck Report, older Americans are more prepared for a short-term financial emergency than younger Americans. When asked if they would have trouble paying for a $400 expense, Gen Z was the most likely to say yes, and Baby Boomers were the most likely to say no.

Here are the percentages of each generation that say they would struggle to pay for a $400 emergency expense:

  • Generation Z: 59% 
  • Millennials: 44%
  • Gen X: 51%
  • Baby Boomers: 42%

This particular survey also broke out the results for Bridge Millennials or Xennials – those people on the cusp of Gen X and Millennial who feel like they have traits from each generation. Their response also reflects that trend, as it was squarely between Gen X and Millennials at 46%. 

To put it another way, just over half of Millennials and Baby Boomers are ready for a $400 emergency. Only 41% of Gen Z and 49% of Gen X are ready. 

Three months of liquid savings

The standard rule for financial security is to have three months’ worth of expenses in a liquid savings account. Unfortunately, the majority of people have not reached this goal, but there are significant differences in savings rates for each generation. 

According to a survey from Bankrate, 62% of Baby Boomers have three months of expenses in savings, while only 40% of Millennials and 47% of Gen Xers can say the same. When people don’t have savings, they experience more stress. They know that if they lose their job or get a long-term illness, they won’t be able to pay their bills.  

Because of these relatively low savings rates, only a small portion of each generation feels confident about their savings levels. When asked if they’re comfortable with the amount they have in savings, only 49% of Baby Boomers said yes, followed by 38% of Millennials and 41% of Gen Xers. In other words, over half of the people from these generations are worried about how much they have in savings. 

Retirement savings

The above surveys didn’t take Gen Z into account – after all, this generation is just starting to enter the workforce and many of them are still teenagers. But this hasn’t stopped them from saving for retirement. Research from BlackRock indicates that Gen Z has the highest retirement savings rate and feels the most confident about their ability to retire. 

Millennials, Gen Xers, and Baby Boomers save 12% of their incomes on average for retirement, but Gen Z is socking away 14%. When asked if they feel confident about their ability to fund their retirement, just over half (60%) of Millennials and Gen Xers say yes. Slightly more Baby Boomers (65%) say that they feel confident about retirement. Surprisingly, the youngest generation has the highest rate of confidence at 69%. Is this the hubris of youth, the fact that retirement is so far away for this generation, or a reflection of their relatively high savings rates? It’s likely a combination of all three factors.

Financial worries

While different generations are saving for retirement at similar rates, the majority of all people aren’t thinking that far ahead. According to the World Economic Forum, 49% of Millennials say they’re too worried about the present to think about the future, and 46% of Gen Xers and 55% of Baby Boomers say the same. 

This immediate stress reduces retirement savings rates, but it also bleeds into employees’ everyday lives. When employees are stressed about finances, they worry about money while they’re at work. This reduces their productivity levels. 

Financial literacy rates

Financial stress directly correlates with financial literacy. The higher your employees’ financial literacy, the lower their financial stress levels. This also varies between different generations. 

When the Global Financial Literacy Excellence Center looked into financial literacy across the generations, the researchers found that Gen Z was the most likely to have taken a financial literacy class. Despite this fact, though, this generation had the lowest scores in the group’s financial literacy test. Only 43% of Gen Z passed the test, but the scores weren’t great in any generation. Only 48% of Millennials, 49% of Gen Xers, and 55% of Baby Boomers passed. 

The financial literacy of each generation also varies based on the type of knowledge involved. Among all generations, the highest financial literacy levels relate to functional knowledge of saving and borrowing, but Gen Z has the lowest rates of knowledge on this topic. 

How employers can help

As an employer, you can’t run your employees’ finances for them, but you can give them the tools they need to succeed. In particular, you can help them to save in a way that reduces their stress. Employer-sponsored emergency savings (ESAs) can help, especially when coupled with financial literacy or wellness initiatives. 

At SecureSave, we help employers offer emergency savings accounts to their employees of all generations. Funded by automatic payroll withdrawals, ESAs help set your employees up for success. They can help ensure that a $400 short-term emergency is manageable and not a situation that snowballs into despair. Ready to learn more? Then contact us today.

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Devin Miller

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