Gen X & Their Personal Finance Woes: Help Is on the Way
Gen X is in a bit of a financial bind. When the economy tanked in 2008, most millennials were too young to lose much, and boomers already had decades’ worth of equity in their homes and growth on their investments. Gen Xers, though, had young kids to feed and mortgage payments to make. Median household net worth dropped 59 percent for people ages 35-44 between 2005 and 2010, the largest decline of all age groups, according to the U.S. Census Bureau. Today, a household headed up by those in the 35-44 age group is 44 percent poorer than its 1984 counterpart, the Pew Research Center reports.
The good news? The economy is on the mend, and Generation X still has plenty of time left to improve its financial situation. We’ll get you started:
Review Past Financials
Any type of planning starts with a review of what’s gone before, and financial planning is no different. Set aside some time to review these major finance areas. Document them in an easy-to-reference spreadsheet or chart, or use any of these personal accounting software programs.
- Income – Look at all sources of income, so you know what you have coming in each year. Last year’s tax filing is a good place to start, but also look at gifts and income from sales of things like automobiles or household items. If you’ve recently sold your structured settlement payments to a company like J.G. Wentworth for a lump sum, count that too, as well as any lottery or gambling winnings and inheritances.
- Expenses – Pull out your files and tally up 12 months of gas, phone, electric, credit card, cable or satellite TV, Internet and any other monthly expenses.
- Security – Look at all your insurance policies: automobile, home or renter’s, life and other insurance, such as flood insurance and any riders for jewelry or valuables.
Check These Each Year
Check your financial health on a regular basis—monthly or every six months, ideally. A financial review forces you to examine and understand your spending and saving habits, and you can make any adjustments from there. Besides spending and savings, other important financial areas to review include:
- 401(k) – Look at your 401(k) balance and contributions at least once a year. Assess if you want to increase or decrease your contributions, and check if your fund still matches your investing goals. Many 401(k) plans have resources for investors to help review and plan.
- Income Tax Withholding – Look at your income tax withholding to ensure it’s the right amount for income projections for the coming year, and make any necessary adjustments.
- Budget – Review the year’s budget performance—or, if you don’t use a budget, make one. Use your monthly expenses from the past year to set up budget targets, and add in any expected new expenses for the upcoming year.
If you’re in over your head or ready to start investing, consult a financial planner. He or she can help you create a budget, dig out of credit card debtand figure out future investment and retirement strategies.