Generational Finances: How Debt, Inheritance and Milestone Spending Impact Each Generation
Financial security is often seen as a natural reward for getting older, the idea being that by midlife, people have climbed the career ladder, built up savings, and moved past big expenses like childcare and mortgage debt
Here, exclusive data from MoneyPlus reveals how summer milestones impact the finances of each generation, which generation is relying on inheritance to retire, and who is in debt, with 3 ways to navigate financial strain.
Millennials & Gen Z Are the Most Likely to Sacrifice a Holiday to Celebrate Others’ Milestones
60% of those surveyed across Gen Z, X and millennials admitted that they were forced to give up a holiday due to financial reasons.
The summer months sees an influx of ‘milestone’ events for people across all generations. This can lead to them foregoing their own holidays to afford milestone celebrations for others, such as baby showers and hen or stag dos. The pressure to splash out on these events has significantly increased in recent years. According to Aviva, the average spend for a hen or stag do reaches £779 for the UK and £1,200 for events abroad.
60% of those surveyed said they felt pressure to spend a lot on these events. While it’s no surprise that the younger generations – who are at the peak age for these celebrations – would feel this strain, the scale of it is striking. A significant 65% of Millennials and 64% of Generation Z reported feeling this pressure, highlighting how widespread and normalised these financial expectations have become.
Despite not being at peak age for such celebrations, over half (54%) of Generation X respondents also said they felt obliged to spend significant amounts on others’ milestones. Financial strain and social pressure to show up and spend, for friends and family don’t necessarily ease with age.
Relying on Inheritance to Retire
An alarming 74% of 45–60-year-olds say they are worried about their financial situation in retirement, with nearly a third admitting they are relying on inheritance to support themselves later in life. This growing dependence on future windfalls, which are never guaranteed, highlights a lack of financial certainty.
Debt is hitting every generation hard. Nearly half of Generation Z (44%), over half of Millennials (51%) and 50% of Generation X say they have debt – showing just how widespread the problem has become. The fact that almost half (48%) of respondents overall have debt signals the financial pressure many are under.
Generation Debt
To deal with their debt and spread-out payments, many are using Buy Now, Pay Later (BNPL) services such as Klarna and ClearPay, a form of credit where you borrow the money and repay it in instalments. Although methods like BNPL can be helpful for large purchases in some circumstances, they can also indicate issues with financial planning.
Unsurprisingly, BNPL is most popular among the younger generations, with 33% of Generation Z and 40% of Millennials admitting to using it. Over a quarter of Generation X (26%) use BNPL, which shows no generation is immune to the appeal, or necessity, of these credit options.
The uptake among Generation X may reflect the financial squeeze they’re facing, balancing everyday expenses with long-term responsibilities like mortgage payments, caring for relatives, and saving for retirement. While younger users may turn to BNPL due to lower incomes or lack of access to traditional credit, Generation X usage suggests that even those with more financial experience are feeling the pressure.
How to Navigate Financial Strain
– Log Your Wins
Keep a diary of all your progress. Whether it’s paying a minimum payment or skipping buying a takeaway to save money, keeping a diary of positive actions that you have taken to aid in gaining financial freedom. Keeping a log of all your financial wins serves as an asset to refer to when you are feeling anxious about your debt. This works to boost morale as well as provide motivation to carry on.
– Don’t Ghost Your Lender
It’s easy to bury your head in the sad when you feel overwhelmed, intimidated and worried however, talking to experts can reveal opportunities that you never knew existed. For instance, Individual Voluntary Arrangements (IVAs) offer personalised repayment plans tailored to individual financial circumstances. Ensure that any payment plan that you agree to is sustainable for you in the long term, and not just a temporary solution.
– Tackle it Head On & Research Your Choices
There are several ways to tackle debt and chances are, a lot of then you have never heard of. From DMPs (debt management plans). Finances and debt can feel like a taboo subject however, instigating open and honest conversations with professionals will likely present the opportunity to uncover solutions you didn’t know existed.
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