I’ve always admired the financial wisdom of the baby boomer generation. The way they handle their finances, save for a rainy day, and make smart investments, is something to take note of.
Yet, there seems to be a disconnect between generations when it comes to money habits.
Younger generations are often labeled as reckless spenders with no thought of saving for the future.
But here’s the deal.
This isn’t necessarily true. There are countless millennials and Gen Zs who are financially savvy.
However, there are certain spending habits of boomers that could help younger generations secure an even better financial future.
So, if you’re wondering, “What can I learn from boomers about spending smartly?”
Here are seven habits that could seriously improve your financial health, backed by psychology.
These aren’t just run-of-the-mill tips. They are proven strategies that have stood the test of time – and they’re definitely worth considering.
Let’s dive in.
1) Living within your means
The first lesson we can learn from boomers? The importance of living within your means.
This concept may seem old-fashioned in today’s culture of instant gratification, but it’s a habit worth developing.
When you live within your means, you spend less than you earn. This not only helps to avoid debt, but it also allows you to save for the future.
Psychology backs this up too. Studies show that spending beyond your means can lead to stress and anxiety.
On the other hand, living frugally can lead to feelings of contentment and financial security.
So, if you’re looking to improve your financial health, start by taking a page out of the boomer playbook.
Know your income, track your expenses, and make it a point to live below your means.
It’s a simple habit, but one that can have a profound impact on your financial future.
2) Prioritizing savings
Here’s another boomer habit that we could all benefit from: Prioritizing savings.
I remember my grandmother, a bonafide boomer, always emphasizing the importance of saving money. She had a little tin box where she’d put away a few dollars every week – no matter what.
By the end of each year, she’d have a nice sum saved up. It wasn’t about the amount, but the consistency. She made saving a priority, not an afterthought.
This habit resonated with me. When I got my first job, I made sure to set up automatic transfers to my savings account.
And guess what? It worked! Over time, those small amounts added up.
The psychology behind this is straightforward: When you prioritize saving, you’re essentially prioritizing your future self.
You’re ensuring that you have a safety net for unexpected expenses or emergencies.
And in the long run? This habit can pave the way for financial stability and peace of mind.
So, make saving a regular part of your financial routine – your future self will thank you.
3) Avoiding debt like the plague
Let’s not sugarcoat it – debt is a monster. It lurks in the shadows of your finances, growing and feeding off your hard-earned money.
Boomers understood this. They viewed debt as a last resort, something to be avoided unless absolutely necessary.
I’ve met folks from this generation who would save for months, even years, to buy something they wanted, refusing to take on debt. They’d rather wait and save than owe and pay interest.
There’s wisdom in that approach.
Psychology tells us that debt can have a significant impact on our mental health. It increases stress levels, causes anxiety, and often leads to feelings of guilt and shame.
So maybe it’s time we rethink our relationship with debt.
Do we really need that new gadget now, or can we wait a bit? Is it worth adding another monthly payment to our pile of bills?
Because let’s face it – the temporary thrill of a purchase rarely outweighs the long-term strain of paying it off.
4) Investing in experiences, not things
Here’s a thought: Do you remember what you bought with your first paycheck? Or do you remember the first trip you took with that money?
Chances are, it’s the experiences that stick with us, not the material possessions.
Boomers understood this. They valued experiences – family vacations, education, cultural events – over acquiring things.
They recognized that experiences contribute to personal growth and lasting happiness.
And guess what? Psychology backs this up. Research has shown that people who spend money on experiences rather than material goods are happier and feel the money is better spent.
So next time you’re about to splurge on a new gadget or outfit, ask yourself if that money could be better spent elsewhere.
Maybe it could go towards a class you’ve always wanted to take, a trip you’ve been dreaming of, or even a nice dinner with loved ones.
After all, memories last a lifetime, while things… well, they don’t.
5) Understanding the power of compound interest
I’ll let you in on a little secret – compound interest is a financial superhero. It has the power to turn your savings into a substantial nest egg over time.
Boomers were well aware of this. They started saving early and consistently, allowing compound interest to work its magic.
Here’s how it works: When you save money, you earn interest on that amount. The next year, you earn interest on both the original sum and the interest earned.
This continues year after year, and your savings grow exponentially.
Now for the fascinating bit: According standard compund interest calculations, if a person saves $200 a month starting at age 25, they’ll have around $520,000 by the time they retire at 65, assuming an average annual return of 7%.
That’s the power of compound interest!
So don’t underestimate this financial superhero. Start saving early, even if it’s just a small amount. Over time, compound interest will take care of the rest.
6) Giving back
One of the most beautiful spending habits I’ve observed in boomers is their commitment to giving back.
Whether it’s donating to a charity, supporting a local business, or helping a friend in need, they understand the value of generosity.
This isn’t about being flashy or seeking recognition. It’s about understanding that we’re all in this together, and when we help others, we strengthen our communities.
Psychology supports this too. Studies have shown that giving to others can boost our own happiness and well-being.
It fosters a sense of connection and community, enriching our own lives in the process.
So consider making room in your budget for kindness. Not only will it make a difference in someone else’s life, but it’ll also add to your own sense of fulfillment and joy.
Because at the end of the day, it’s not just about what we accumulate, but also about what we contribute.
7) Planning for the long-term
Here’s the crux of it all – boomers are masters of long-term planning. They didn’t just think about their immediate needs, but also about their future goals and retirement.
This foresight allowed them to make smart financial decisions. They saved, invested, and spent wisely, ensuring a comfortable life for themselves and their families.
Psychology tells us that envisioning our future selves can motivate us to make better financial choices today. It helps us understand that the decisions we make now will impact our lives down the road.
So take a moment, picture your future self.
What kind of life do you want? What financial steps can you start taking today to make that vision a reality?
Remember, smart spending isn’t just about managing your money wisely today.
It’s about planning for a secure, stable, and fulfilling future. And that’s a habit worth adopting.
Final thoughts
If you’ve made it this far, you’re likely ready to imbibe some of that boomer wisdom into your financial habits.
Remember, this isn’t about a sudden overhaul of your financial life. It’s more about gradually adopting habits that can bolster your financial health in the long run.
Start small. Perhaps you decide to save a little more each month, or maybe you choose to cut back on impulse buys.
Each small step is a step towards financial stability and security.
Reflect on your spending habits.
Do they align with your long-term goals? Are there adjustments you can make to better serve your future self?
And most importantly, be kind to yourself during this process. Change takes time, and old habits die hard.
With patience, persistence, and a sprinkle of boomer wisdom, you’ll be on your way to building a financially secure future. And that’s a journey worth embarking on.
