Compared to other generational cohorts, Generation X, born between 1965 and 1980, has the greatest majority of people who say they don’t make enough money to pay off their debt.
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According to a recent GOBankingRates study, 57% of respondents ages 45 to 54 say they don’t make enough money to pay off their debt. Meanwhile, nearly 48% of those ages 55 to 64, which encompasses older Gen X and younger baby boomers, also say they have too little income to tackle debts.
Other reasons they can’t pay off their debt as quickly as they like include:
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Too many other bills/expenses (35% and 29%)
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Rising interest rates (17% and 44%)
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“Don’t know where to start” (8% and 9%)
Yet, as Austin Kilgore, Analyst with the Achieve Center for Consumer Insights at Achieve pointed out, living debt-free is the number one financial goal for 52% of Gen Xers, according to a survey by Achieve.
“Many of its members are in prime parenting years, many are facing major expenses to send children to college, and many are caring for parents and other older relatives,” Kilgore said.
On top of these economic stressors, Gen X may have lower salaries than their younger counterparts in comparable positions. The demographic entered the job market at a time when employers were starting to do away with pensions and the concept of longevity, but job loyalty was still ingrained in Gen X by their parents, who often stayed with the same company their entire career.
This leads us to six reasons Gen X lacks the money to pay down their debt right now.
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Gen X Didn’t Job Hop Enough
Maura Madden, a Certified Financial Planner, pointed out that Gen X was raised at a time when job hopping was less common, and this has worked to their detriment. But it’s not too late to fix it, she said.
“The best way to increase income is to move to a new position or a new company. Gen X has to get over their loyalty and resistance to change. Find a new job that pays better. See if your current employer will match the offer,” Madden said.
Need To Request Raises — the Right Way
Gen X places a heavy emphasis on education, credentials and certifications, according to experts. But these achievements may not move the needle on your salary as much as you might think.
“When seeking raises,” Madden said, “Gen X must approach employers with documentation of how they add to the company’s profits.”
Still Paying Student Loan Debt
A study published by Self.inc showed that Gen X holds the most student loan debt of any generation, with an average of $45,796. Kilgore pointed out that 13% of working Gen Xers still have student loan debt. “The wind-down of student loan forbearances have exacerbated an already fraught financial situation,” he said.
“College costs are a large source of debt for Gen Xers. Many younger Gen X members are still paying down their own college debt. They are the first generation to have substantial college loans with 30-year payment schedules,” Madden agreed.
Paying for College for their Children
While they are still paying off their own student loans, many Gen X parents are now also taking on loans to help fund their children’s college education. This could be a mistake, especially if you’re also grappling with high-interest credit card debt and other expenses.
“Gen X parents often need to accept that their children will need to find ways to reduce their educational expenses or pay themselves. Gen X is nearing retirement and should make sure that their own futures are secure before paying large educational expenses for their children,” Madden said.
Caring for Aging Parents
Many Gen Xers are still in their prime parenting years, as Kilgore said. Yet, they may also be caring for aging parents or other relatives. This may lead to higher lifestyle costs as you care for an additional family member, as well as less time, and more stress.
Less Time for Side Gigs
Millennials dominate the gig economy, studies show. A 2023 study indicated that 45% of millennials worked as freelancers, compared to just 27% of Gen X. Between raising a family and caring for aging parents, not to mention a full-time job, it can be hard for Gen X to consider adding more responsibilities to their lives.
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But Kilgore noted that taking on a side gig to generate additional income can be one solution to mounting debt. Potential opportunities include teaching ESL or a foreign language online, putting computer skills to use in a side business, or working as a virtual assistant. “The demand for petsitting, dog walking, housesitting and yard care services is always strong,” he said. “The key is to find something you truly like doing and has the flexibility you need.
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This article originally appeared on GOBankingRates.com: 6 Reasons Gen X Is Not Making Enough Money To Pay Debts
Source: 6 Reasons Gen X Is Not Making Enough Money To Pay Debts
