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Generation X'rs Need Money Management Skills

Submitted by admin on Tue, 08/28/2007 - 22:32.

While Generation X--those born between 1965 and 1976--earn more than their parents, more than half live paycheck to paycheck with an ongoing credit card balance of at least $2,000. Half of them don't know how much they have saved for retirement or have saved less than $10,000, according to a survey by Oppenheimer Funds and Yankelovich Partners (Bottom Line Personal March 15).

Some steps Generation Xers can take to get control of their money include:

  • Before taking on new debt, determine if you can afford it. For example, before charging an item to a credit card, add 16%--or whatever the interest rate is--to the cost of each item you buy. That's the true cost if you pay off the balance over the next year--is it worth it?

  • Create a cash flow chart--keep track of every penny you earn and spend for three months. Figure out what would be the easiest to eliminate.

  • Limit access to your money. Determine how much cash you'll need for a week and only carry that amount. Limit your credit card charges to situations such as renting a car or making a large necessary purchase.

  • Plan every expenditure you can such as food, car maintenance, insurance, rent/mortgage, retirement savings, and utilities.

  • Try to shorten the repayment schedule on student loans by making more than the minimum payment or by paying on time. Sallie Mae, for example, will reduce your interest rate by up to two percentage points if you make 48 consecutive payments on time.