Generation X is classically defined as people born between the years 1965 and 1979. Pretty much those of you in your late 30’s and now, *GULP* into the early 50’s. Having given personal financial advice to thousands of people, I can tell you that many of you who were born 1960 to 1964 fit within the Generation X type of financial and personal attitude. Since I am 47 and have had a good deal of financial success on my own, I’ve noticed some big mistakes that I see my generation making with their money and how they think about money. One of the main problem with our generation is that it seems we can defy gravity when it comes to buying anything but savings for our own future.
Where do you think we should take the kids away for spring break this year? Should we go away for Thanksgiving or would it be better during the holiday season? I know the children have sports and camps over the summer, but wouldn’t it be nice to have a memorable week away down at the beach? Have you ever had these types of conversations at your household before? In fact, my guess is that you probably spend more time planning that picturesque vacation than you do thinking about what it will cost for your kid’s college education as an example. Many Gen X’ers say they have too many bills, private school tuition, vacations, and much more that inhibits their ability to save. This is true even though family incomes are soaring well past $100,000 per year.
Take vacations as just a sliver of the overall problem. Any trip for a family of four (where you aren’t able to use frequent flier miles/reward points) that involves airfare, hotel, car rental, and food/entertainment for a week is going to be in the $4,000 to $6,000 range. If you take two of those trips during the course of the year, you are potentially looking at $10,000 a year of additional expense to your bottom line. I think it is a very good financial planning idea to sit with your partner and spouse and talk about what a memorable vacation means to you. You should also think about how you can do something nice without it costing an arm and a leg. That may mean doing something within driving distance, only doing one nice trip per year, or using a website like www.lastminutetravel.com to do something more spur of the moment.
The reason this discussion is so important is that if you have two children, the cost of a private school education can be in excess of $200,000 today if you are planning to fully fund that college education. Even for a public in-state school, it can cost you in the $50,000 to $75,000 range depending on your state and the institution. If you have just one 4th grader and have not started saving yet, it will take you more than $5,000 a year of savings just to get close to paying for an in state public college education. (Based up 6% inflation for college costs, and a 7% investment return)
Most Gen X parents want to be able to do it all for their children while balancing having fun for themselves. This means having a wonderful home to grow up in, traveling to some cool vacation destinations, and wearing brand name clothes. However, you need to plan to have some balance between saving and spending when it comes to vacations and college education or you just might wind up taking a left turn to destination nowhere. If you can’t afford expensive holiday gifts, a fancy vacation, or a shiny new car for your child, just tell them the truth. But for sure, quit buying stuff you can’t afford! It will always cost you one way or another.
Go to www.oxygenfinancial.net to request a consultation with the leading experts for Generation X in the country.
Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO ofoXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.