Supremely Confident to Super Stressed: Landmark Gen X Study From Schwab Uncovers Six Distinct Financial Mindsets
Study Also Overturns Common Misperceptions About Gen Xers
SAN FRANCISCO--(Business Wire)--
Charles Schwab's Gen X Money Mindsets Study, a segmentation study
of more than 5,000 Americans aged 25-40 found that younger investors
generally fall into six distinct categories based on their mindsets
and attitudes toward money. The study also overturned some commonly
held beliefs about Gen Xers and their attitudes toward finances,
investing, and achieving the "American Dream."
"One of Schwab's primary goals is to better understand and serve
Gen Xers, who are facing some real financial challenges," said
Jonathan Craig, vice president at Charles Schwab. "The generation is
challenged by rising costs of healthcare and education, diminishing
defined benefits through employers, and uncertainty around the future
of Social Security. We wanted to dig deeper to uncover this group's
attitudes when it comes to money, and better understand how these
attitudes guide their behaviors."
Different Mindsets, Different Needs
The Schwab Gen X Money Mindsets Study identified six distinct
Money Mindsets, each with its own lifestyle goals and financial
attitudes:
Money Mindset One: Paycheck to Paychecks
By far the largest group representing 25 percent of Gen Xers,
members of this predominately female group are extremely stressed
about their personal and professional lives. They are less confident
than any other group about having a bright future, and are twice as
likely to be unsettled and pessimistic about their financial
situations.
-- More than any other Gen Xers, "Paycheck to Paychecks" live on
a strict budget with nothing left over to save (85 percent vs.
47 percent for all Gen Xers).
-- More than the other groups, 48 percent report
financially-induced anxiety (vs. 18 percent of all Gen Xers).
-- Eighty-one percent stress about the direction of their
personal lives and 67 percent are worried about the direction
of their professional lives.
Money Mindset Two: Spend Now, Pay Laters
Seventeen percent of Gen Xers fall into this category of
predominately city dwellers that tend to be optimistic, yet somewhat
unrealistic about their futures. Overwhelmingly male (77 percent),
this group is incurring significant debt, and believes that Social
Security will be there for them when they retire.
-- While almost half (48 percent) say they have enough money and
don't worry about saving for the future, 67 percent say they
have too much debt to think about investing.
-- This group is almost twice as likely as any other segment to
believe Social Security will be a big part of their retirement
income (57 percent vs. 26 percent of all Gen Xers).
-- Sixty-one percent -- more than any other segment -- don't
worry much about money and think "it's all going to work out."
Money Mindset Three: Confident and Risk-Tolerants
Representing 15 percent of the overall Gen X population, members
of this group have high incomes, active lifestyles and high levels of
engagement in their financial future. They are more likely to be
married, and believe that by taking risks they can reach lofty
financial and lifestyle goals.
-- Almost all (96 percent) are confident their future is bright,
compared with 65 percent of fellow Gen Xers.
-- More than three quarters (76 percent) are confident that
someday most of their income will come from investments,
versus 36 percent of Gen Xers overall.
-- Nearly eight in ten (79 percent) say that many of their
successes have come because they have been willing to take
risks, compared with 55 percent of fellow Gen Xers.
Money Mindset Four: No Money, No Worries
This group represents 15 percent of the Gen X population. They are
at the bottom of the earnings spectrum yet are very optimistic about
life. They are more likely to be single, consider investing risky, and
have the fewest number of credit cards. This group also has very
little trust in financial firms or advisors.
-- While 57 percent make less than $50,000 per year, this group
doesn't worry much about money.
-- On a typical day, nearly seven in ten (69 percent) spend more
time thinking about their weekend plans than the state of
their finances (vs. 45 percent for all Gen Xers).
-- This group is more likely than any other group to say they
don't have a financial advisor because "you can't trust them"
-- four in ten (41 percent) won't trust a broker to take care
of their financial needs.
Money Mindset Five: Cautious Savers
Approximately 14 percent of the Gen X population, this group tends
to be financially conservative and concerned about money, highly
educated and financially secure, yet is late to adopt new products.
They are also more likely focused on home and family than they are on
having active social lives.
-- More than eight in ten (82 percent) say they plan for the
future rather than live for today.
-- Nearly seven in ten (69 percent) try to minimize risk and
uncertainty in their lives (vs. 59 percent of all Gen Xers).
-- Only 16 percent think they will be in debt for the rest of
their lives, compared with 35 percent of Gen Xers overall.
Money Mindset Six: Overwhelmed but Optimistics
Predominately female, these Gen Xers have significant debt,
adjustable rate mortgages, and high rates of financially-induced
irritability or anxiety. Despite this, they manage to stay positive
about their futures. This group represents 13 percent of the Gen X
population.
-- Eighty percent live on very strict budgets with nothing left
over to save. More than any other group, they think about
their finances daily (87 percent, compared with 66 percent of
all Gen Xers).
-- More than a quarter (26 percent) report financially-induced
anxiety (vs. 18 percent of all Gen Xers).
-- This group is future-focused, with three quarters (75 percent)
saying they have a vision of where they want to be in ten
years (vs. 59 percent of all Gen Xers)
Some Common Traits
In addition to the six mindsets, the Schwab Gen X Money Mindsets
Study identified several key characteristics that are held by the
majority of Gen Xers. The study reveals that many Gen Xers are not
characterized by skeptical attitudes, and instead favor a more
traditional outlook on life and financial aspirations.
-- American Dreams: Gen Xers have often been labeled as
"slackers" and were assumed to have rejected the traditional
working-class lifestyle. However, almost two in three (64
percent) say they are focused on attaining the American Dream
of family, homeownership, and financial security. Almost two
in five (39 percent) would like to attain the lifestyle
enjoyed by the financially successful people who surround
them.
-- Drowning in Debt: Gen Xers are saddled with debt. Almost 45
percent say they have too much debt to even think about saving
or investing, and more than a third (35 percent) think they
will be in debt for the rest of their lives.
-- Financial Anxiety: Most Gen Xers are worried about their
financial futures. Two-thirds (66 percent) admit to thinking
about their finances on a daily basis, and nearly half (46
percent) also worry about the finances of their parents and
siblings.
-- No Savings: Many Gen Xers report an inability to save, with
nearly half (47 percent) reporting they live on a very strict
budget with nothing left over to save. When asked if they are
more proactive in saving for a vacation or retirement, 43
percent say they focus on saving for a big trip.
-- Little Faith in Financial Firms: Many Gen Xers do not believe
financial firms can help them. More than half (51 percent)
think that investment firms don't care about people like them
-- those who don't have a lot of money. And 46 percent feel
that by turning to firms and advisors, they might end up
spending more money than they make.
About the Study
Few generations have been so thoroughly scrutinized and
misunderstood as Generation X. The members of the MTV Generation have
been consumers almost since birth, but their importance grows as they
transition into investors, homeowners and parents. To provide fresh
insights into this generation, Charles Schwab conducted The Gen X
Money Mindsets Study -- it incorporates more than 2,000 online and
face-to-face interviews nationally and an additional 3,000 interviews
in America's largest cities. This effort produced six unique profiles
of Gen X attitudes and mindsets toward life and money -- and toward
understanding how those mindsets guide the group's financial
behaviors.
A segmentation study creates profiles of a population by using
statistical analysis to define groups of individuals around certain
characteristics.
About Kelton Research
Kelton Research is a full service market research consultancy with
offices in Los Angeles, New York, and Washington DC. Kelton serves as
a strategic partner to both Fortune 500 corporations and smaller
companies, utilizing a wide range of qualitative and quantitative
methodologies to drive tactical recommendations for clients. For more
information about Kelton's services, please call (310) 479-4040 or
visit www.keltonresearch.com.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider
of financial services, with more than 300 offices and 7.0 million
client brokerage accounts, 1.2 million corporate retirement plan
participants, 262,000 banking accounts, and $1.4 trillion in client
assets. Through its operating subsidiaries, the company provides a
full range of securities brokerage, banking, money management and
financial advisory services to individual investors and independent
investment advisors. Its broker-dealer subsidiary, Charles Schwab &
Co., Inc. (member SIPC, http://www.sipc.org), and affiliates offer a
complete range of investment services and products including an
extensive selection of mutual funds; financial planning and investment
advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank (member FDIC) provides banking and mortgage services and
products. More information is available at www.schwab.com. (1107-8837)
Charles Schwab
Matt Hurwitz, 415-636-3700
matt.hurwitz@schwab.com
Copyright Business Wire 2008
