Gen Xers are doing the worst job with money: Survey

Mutil generational family
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Each generation has its distinct challenges. That's especially true when it comes to money.

Financial Finesse, which runs financial wellness programs for employers, recently studied how millennials, Generation X and baby boomers handle their money. And you may be surprised by what they found.

Despite record student loan debt, high unemployment and low saving rates, millennials actually came out ahead of Gen X. In fact, there are stark differences in money habits between each of the generations.

Millennials: They do a better job of managing their day-to-day finances than Gen Xers, according to Financial Finesse's research, which is based on responses from workers who use its financial wellness programs at more than 600 major companies.

Seventy-two percent of millennials in this survey said they have a handle on their cash flow and spend less than they make each month (though this does conflict with other surveys that have found lower saving rates). That's compared to 68 percent of Gen Xers. Millennials also were more likely to say they pay their bills on time, avoid late fees and regularly pay off credit card balances in full than Generation X.

But millennials said they are being crushed by student debt. That's not surprising. The average student loan balance for those in their 20s is $25,500, up 60 percent from $15,900 in 2005, according to credit bureau TransUnion.

A higher debt load means less money left over for savings. "A lack of emergency funds is causing millennials to raid their retirement accounts for unexpected expenses," said Liz Davidson, CEO of Financial Finesse.

If those funds aren't replaced quickly, that can cost them dearly down the road. But millennials do have the advantage of having more years to build a retirement nest egg than their older peers.

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Generation X: Members of this group are the least likely to achieve financial security because of competing financial priorities, according to the survey. Gen Xers are also most likely to report that they are financially stressed out, with more than one-fourth describing their financial stress level as "high" or "overwhelming."

Squeezed by saving for their kids' college education and squirreling enough away for retirement has strained Gen Xers' finances. Only 17 percent said that they were set to retire comfortably, yet 23 percent are contributing to 529 college savings plans. "Gen Xers are sacrificing their own financial security by overprioritizing saving for their children's college education," Davidson said. Kids can take out student loans for college, but you can't borrow your way into a nice retirement.

Davidson suggested that Gen Xers gradually increase their retirement plan contributions each year to reduce financial stress, upping contributions with annual raises. She pointed out that many employers, especially large ones, provide retirement plans that will automatically increase plan contributions over time. The majority of large companies also offer contribution matches.

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Baby boomers: They are in better financial shape than millennials and Generation X, but many lack insurance to cover long-term care in the future.

Only 16 percent of those surveyed have long-term care insurance though about 70 percent of people 65 and older will need some form of that insurance, according to estimates by the Department of Health and Human Services. A study by long-term care insurer Genworth found that the average cost of a private room in a nursing home was $240 a day, or $87,600 a year. But financial advisors say long-term care insurance can be a tough sell since it can be pricey and it reminds boomers of their impending mortality.

Buying long-term care insurance later could mean higher premiums, though, and if someone's health has worsened in the meantime, that could make coverage more expensive or difficult to quality for. "Boomers should consider buying long-term care insurance now when they are relatively young and healthy," Davidson said.

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