No matter what stage of life you're in, managing your money well isn't easy. When you're young and just starting your career, you're likely barely scraping by on a meager salary, trying to make ends meet. But as you get older and your income increases, so do your expenses, as kids, a mortgage, and car loans take larger chunks out of your paychecks.
So it's easy to see the grass as being greener on the other side. When you're younger, you may think things will get easier as you get older. But then once you are older, you might wish you could go back in time to when you didn't have quite so many bills to pay.
Yet while an individual's level of financial security largely depends on their own unique situation, speaking broadly, some generations are happier with their financial health than others.
Where does your generation stand?
In general, the silent generation -- those born between 1928 and 1945 -- reports the highest levels of financial security, with 51% saying they consider themselves financially secure, according to a survey from YouGov. The youngest people in that generation are 74 years old, so by this age, they may have paid off all their debts and are simply enjoying their golden years. While retirement can be a stressful time for some (particularly for those who have fallen behind on their savings), these retirees are more likely to be happy and comfortable with their financial situations.
On the other side of the coin, the demographic with the least confidence in their finances is Generation X (those born between 1965 and 1981) -- only 33% of them say they feel financially secure, the YouGov report noted. As Gen Xers today fall between the ages of 38 and 54, they're likely balancing multiple financial priorities: contributing to their children's college tuition, saving for retirement, and paying down mortgages With so many responsibilities pulling on their wallets at once, it's natural they'd feel more stressed.
The other adult generations -- millennials and baby boomers -- fall in the middle of the spectrum. Roughly 42% of millennials report feeling financially secure, as do 38% of baby boomers.
What is financial security?
While the specific conditions that will give you a feeling of financial security are fairly personal, as a general rule, that sentiment will be built on a foundation of confidence in your ability to both cover your immediate expenses and save sufficiently for your long-term goals. So if you want to feel financially secure, start by maximizing your money and preparing for the future.
If you frequently struggle to pay all your bills, first you need to map out what you're actually spending. Craft a monthly budget that covers all your expenses and look for places to make cuts. If you don't know exactly where all your money is going, you're probably wasting more of it than you realize.
As you're tracking all your expenses, it may be helpful to divide them into two big buckets: necessary and discretionary. Necessary costs include things you absolutely must pay no matter what, like your mortgage or rent, utilities, and loan repayments. Discretionary costs include expenses like dining out, entertainment, and gym memberships -- your "wants," as opposed to your "needs."
Next, divide those costs by category. Be as specific as possible. For example, rather than lumping all costs together into "food," break them down into "groceries" and "restaurants." While you may not be able to lower your grocery bill much, you probably can start spending significantly less on dining out.
Finally, check every spending category for items you can cut. That's not to suggest you should eliminate all the little luxuries in your budget. In fact, it's a good idea to build some splurges into it -- if you try to cut every single non-essential expense, you're likely to wind up so miserable you'll want to give up on following a budget at all. Maintaining a budget is a practice that will stand you in good stead for your whole life, but you need to make sure you've designed one you can stick to.
Where should you put your savings?
Once you have freed up some cash by making these cuts, decide where it will be most beneficial to put it. If you are carrying high-interest debt, make paying it down faster a top priority. Or, if you don't have an emergency fund yet, establish one. That can help you avoid racking up debts in the first place when unexpected expenses arise. A tax-advantaged retirement account is also a great destination for any spare cash you can find, because the earlier you start investing for your golden years, the less you'll need to save each month to reach your goals.
Regardless of where you choose to put those savings, your first priorities should be things that will be beneficial for the long term. A dream vacation may bring short-term happiness, but it won't help you become more financially secure.
No matter what generation you belong to, you'll want to feel good about your money situation, and making small changes now can lead to the financial security you seek later.