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This article was published 4/6/2010 (4034 days ago), so information in it may no longer be current.
As co-owner of retailer Pylon Pop Culture, Darren Elliott couldn't have picked a more fitting vocation for a Generation Xer.
But it's not just that the 36-year-old Winnipeg man makes a living selling pop culture paraphernalia, such as Pac Man key chains and Elvis light switch covers. Like many Canadians in their 30s and 40s, he has also taken a long, winding path to find a steady occupation and income -- despite being well-educated.
Elliott has two degrees -- one in business and the other in education -- yet, like many others of his generation, he struggled to find work in his field of study.
"I was supply teaching and it was hit and miss -- it certainly wasn't steady," he says. Instead, he used his business knowledge to start up a successful enterprise.
And despite the recent downturn in the economy, Elliott is optimistic, partly because of a financial philosophy that seemingly puts him at odds with the rest of his generation.
"I have the advantage of being debt-averse, which puts you in a good position when you don't accumulate debt," he says.
Yet it seems Elliott is in the minority, according to a recent Investors Group survey published last month about Generation X and finances.
A related press release stated Gen X has "a unique set of values when it comes to saving and investing," and cited a U.S. study that a quarter of those between ages 30 to 45 are living paycheque to paycheque and almost one in five are willing to buy now or pay later.
While Gen-Xers are financially aware -- they're inundated with marketing messages about RRSPs and TFSAs -- they're also surrounded by constant "temptation to upgrade -- from cellphones to cars," says Brad Campbell, a certified financial planner with Investors Group in Vancouver.
And because of easy access to credit, many may be giving in.
"If you do look at Gen-Xers, let's say 30 to late 40s, they have really good stuff," say Campbell, who is in his late 40s. "My wife will say, 'We don't even have that stuff, and we've been working hard for 30 years.' "
With his aversion to debt, Elliott doesn't seem to fit that Gen-X mould all that well. But in reality, he does -- except for the fact he's too young, says economist and bestselling author David Foot.
Foot is the author of Boom, Bust and Echo: How to Profit from the Coming Demographic Shift. First published in 1996, the book discusses how the demographic trends -- such as the baby boom between 1947 and 1966 -- influence economic growth. Foot says most people, including marketers, mistakenly assume anyone in their 30s or 40s is part of Generation X.
Instead, it really refers to a small slice of the population born between 1961 and 1966. That means Campbell, not Elliott, is actually a true Gen-Xer, even if he doesn't know it.
Vancouver author Douglas Coupland didn't invent the term when he wrote his famous novel Generation X: Tales for an accelerated culture. But his story about disaffected young adults struggling to find their place in the late '80s made it a household phrase.
"It was all about his generation and that's where the Gen-X logo came from, so what I took his popularization term to mean is the back quarter of the baby boomers," says the recently retired University of Toronto professor. Coupland was born in 1961.
These days, Foot says Generation X has two meanings. There's the real Generation X -- those born in the early '60s -- and the marketing Generation X -- anyone born between 1960 and 1980.
"The marketing of Gen X has all the opposites of the popularized Gen X that was portrayed by Coupland," he says.
The real Gen-Xers were at the tail end of the boomers, just before the pill became commonplace and birth rates dropped dramatically. The Gen-Xers in many ways lived in the shadow of the rest of the boomers.
By the time they were ready to enter the workplace, it was already overcrowded with those born in the decade before them.
"They came into a world in the early '80s, where there was a deep recession in Canada when youth unemployment was at record-high levels, and it took them forever to get established," Foot says.
He says the generation that followed was much smaller in numbers and faced less adversity than the real Generation X -- though they, too, faced the recession of the early '90s.
While Gen-Xers are technically part of the baby boomers, their experience of work and finance has more in common with the generations that follow, Foot says.
"They were the front edge of the new reality where you bounce from contract to contract," he says.
Those born after 1960 entered a very different workplace 20 years later than most of the baby boomers, says Wayne Simpson, economics professor at the University of Manitoba. For one thing, they had no job stability -- a condition that persists today.
"Fewer people have the notion or expectation that if they take a job that they'll be working at that job for life," says Simpson, who specializes in labour issues.
"And part of that is the relative decline in the public sector, but the other part is the decline of the unionized sector where jobs were attractive to the relative education that they had, and they were protected where they had seniority."
Foot says Gen-Xers were most negatively affected by this shift in work because of bad timing. Gen-Xers' formative working years spanned two recessions. It took them longer to get good job experience, earn a steady income, buy a home, get married and have children.
Despite the adversity, they're well-established today -- and well-positioned for the future, Foot says.
"The one thing the Gen-Xer was really good at doing is they realized that you had to look after yourself," he says, adding they are passing this ethos onto their children.
In that respect, Campbell is a model Gen-Xer.
"Being the son of a financial planner can be a nightmare," he says, adding he can be a spending killjoy, harping on his children about the importance of socking money away early.
But more importantly, Generation X and the generations that followed are about to see a shift in the labour market that may usher in a new era of job security and the financial stability that comes with it.
The front end of the baby boomers, now 63, is retiring.
While it won't happen overnight, the boomers retiring over the next two decades will leave significant openings in both the public and private sectors. So those Gen-Xers will step into "positions at the top of organization structures," Foot says, and those in their mid-30s like Elliott will step into the positions left vacant by the Gen-Xers who have moved up the ladder.
"I'm relatively optimistic for those Gen-Xers as the boomers retire," Foot says. "They've already shown patience, so telling them to be patient as the boomers step aside over the next decade is not telling them something they haven't already been doing for the last 20 years of their lives."
Savings tips... for just about any generation
Certified financial planner (CFP) Brad Campbell of Investors Group says regardless of how old you are, the path to financial stability is largely the same: save more and spend less. But even Campbell says it's hard for him to separate the intellectual side of knowing what you should do with your money from the emotional side of doing what you want with it at any given moment.
Use the available tools
RRSPs, RESPs and TFSAs -- many Canadians still underutilize these savings vehicles that are designed to help them build wealth. Campbell says the TFSA is a particularly good savings vehicle for young adults who typically have lower incomes. RRSPs are never a bad choice for your money, but if you're on a lower income, the tax savings are less because your marginal tax rate is already low. But a TFSA allows money to grow tax-free, creating a tax-free source of income later in life, Campbell says.
It may seem a little self-serving that a CFP would recommend the services of a CFP, but despite being one himself, Campbell also has a planner helping him reach his financial goals. "The reason I do that is because I have another person's eyes on my situation," he says. "And if I start to wimp out, that planner will keep me on the straight and narrow."
Pay yourself first
This doesn't mean you go on a spending spree every paycheque. Planners frequently use this financial mantra to emphasize saving and paying bills before discretionary spending. Once bills are paid, groceries are in the cupboard and money has been set aside for savings, anything left over can be used for free spending, Campbell says, adding it's a good way to avoid overspending.
Teach your children early
It may seem like you're nagging them about their money, but Campbell says it's important to impress upon your kids the value of money. These days, access to credit is greater than ever, and many young adults see credit cards as free money -- only to find out later that it's anything but. Campbell says try to point out the value of saving for the long term when they start working.
Generations X and Y versus Boom, Bust and Echo
It can be a tough task to keep up with all the generational terms floating around out there. Here's a quick refresher:
The baby boomers: Not much of a debate who they are. They're just the largest demographic group in modern history, the product of a population boom that lasted from 1946 to 1966 in Canada and the United States.
Generation X: Technically, they're still boomers, but born at the end of the boom and they came into the workforce during two recessions, delaying gainful employment, buying a home and saving. Today, however, the term is much broader, referring to ages 30 to 49.
The Bust generation: Economist David Foot says this generation grew up after the boomers when birth-control methods -- the pill in particular -- became widely available. As a result, the birth rate dropped and has continued to do so until recently. They experienced fewer economic challenges than Generation X.
Generation Y: Those born in the late '70s or after 1980, whose characteristics of being tech-savvy and hyper consumers are often mixed up with Generation X.
The Echo generation: This generation is virtually the same as Generation Y. The term refers to the increase in number of births in the late '70s, '80s and '90s when the boomers started having children. Incidentally, Foot says, this generation may be reversing the declining birth rate trend, having children in their late 20s rather than 30s.