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Family Reunion

family_reunionI was blessed to spend Thanksgiving this year in New Mexico with my wife’s side of the family. Growing up in Wisconsin, my Thanksgivings were always fairly routine: turkey, cranberry sauce shaped like a can, potatoes, etc. This year, however, our Thanksgiving was infused with traditional New Mexican flavors like green chilies and tomatillos. It was different, to be sure, but the most striking difference at the table was less the ethnic divide as the generational divide between the three generations gathered there. Culturally, my parents and my wife’s parents could not be more different. But in terms of worldview and temperament, I noticed a lot of similarities.

In the United States there are, at present, five distinct generations living, from Generation Z, the youngest, to the Greatest Generation. Because of this, it’s easy to compare the characters of each generation. As I saw over Thanksgiving, members of a generation are defined more by the historical events unique to their times than by their own ethnic or religious backgrounds. Although my wife’s parents are Southwestern Hispanics and my parents are Midwestern Germans, they are all of the same generation, which is evident in their lifestyles and spending habits. They believe all debt is bad and made all purchases, from groceries to houses, in cash. The believed savings was its own reward, which is why my father died with millions in the bank.

The following generation—the Baby Boomers—could not have been more different. They have historically had net-negative savings, have been spending wildly for almost forty years, and carry incredible levels of debt from high-balance credit cards to mortgages. The positive effect of this has been the extraordinary expansion the US economy has experienced since the 1980s; the negative effect is that household finances are fragile and cannot easily recover from shocks like the Great Recession.

My generation, Generation X, has been more fiscally prudent than the Boomers, with higher levels of savings and less debt, but we are not as strict with our finances as our parents’ generation. We carry mortgages, often carry balances on our credit cards, and most have student loan debt. And although we’re relatively productive, our numbers were not large enough to make up for the loss in economic activity once the Boomers started retiring. We are, in fact, the first generation that was actually smaller than its predecessor.

I am a firm believer that the Millennials will make up for the lost economic activity as they begin to come of age around 2020. Numerically they are the largest generation in American history and one of the best educated (at least on paper). They are more savvy with using technology to save and invest, so although their purchases of homes and cars tend to be less extravagant as Gen Xers and Boomers, the average US household should be on much firmer footing then we have seen in decades.

The next time your extended family gathers together, take notice of the generational similarities between the different sides of your family. It is astounding how people from different parts of the country—or even different countries altogether!—and different ethnic backgrounds can be so similar. The same broad influences that have affected specific generations in the past will continue to do so, and we’ll eventually see the effects of this on our economy, which can’t happen soon enough!

11-29-2014 Family Reunion

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About Jay Garvens

Standing at the intersection of our local real estate market and the nationwide financial industry, Jay Garvens gives you the complete picture of every story affecting today's mortgage market! From personal finances to the political decisions moving markets, tune in for a weekend dose of straight talk from Colorado's most candid mortgage industry commentator! Honest, unbiased, and always unpredictable, Jay explores every facet of today's mortgage industry with an approach that's refreshingly blunt and enormously entertaining!

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