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Each generation has misconceptions about building wealth, including yours. These financial mistakes can make growing your savings challenging. The more you know about them, the easier it will be to avoid them. Find out where you stand and how you can nurture your nest egg.
Generation Z Chases Trends and Evades Commitment
If a fear of missing out drives your financial decisions, reconsider your approach.
Relying on AI Financial Advice
A PYMNTS study revealed that over 60% of Generation Z use AI for financial planning advice. Although chatbots are convenient and cheap, they have no fiduciary obligation — no legal or ethical duty to act in your best interest.
Not Saving for Retirement
When you’re young, you’re less inclined to save for retirement because it’s so far away. However, the cost to retire creeps up every year. The longer you wait to save, the more difficult it becomes.
Falling for Buy Now, Pay Later
According to Fortune, 44% of Generation Z used buy-now, pay-later (BNPL) services in 2024. Around 50% feel its flexibility helps them manage their finances.
Initially, BNPL loans didn’t appear on your credit report, even if you missed payments. That changed in 2025, when FICO introduced new credit score models that incorporate BNPL data into your credit profile.
Millennials Are Drowning in Debt While Overspending
You might not be able to strike certain budget line items, but you can still avoid overspending.
Accumulating Excessive Debt
The average American had more than $105,000 in debt in 2024. Millennials owe the highest balance of any generation, averaging $371,864. It mainly comes from mortgages, credit cards and auto loans.
Investing in Real Estate
Home prices, interest rates and property taxes are high nationwide. There is even talk of a 50-year mortgage. While this would make homeownership affordable, you’d grow equity slowly and pay more interest.
Home prices reached an all-time high in 2024, pricing millions of potential buyers out of the market. The United States home price index was 47% higher in 2024 than in 2020. Moreover, interest rates on 30-year mortgages reached 7%, a 30-year high.
Mindlessly Following Trends
Sometimes, alternative assets are valuable. Pokémon cards are a great example. However, they don’t often hold value well. For instance, non-fungible tokens (NFTs) lost most of their value as the hype subsided, with trading volumes dropping by 97% within a year.
Generation X Invests Skeptically Despite Mounting Debt
As you near retirement, paying off debt and increasing your savings becomes increasingly vital.
Not Diversifying Investments
You can’t maximize your returns with a cluttered, outdated investment portfolio, especially if your investments are concentrated in one place. Not diversifying can expose you to financial risks.
Maxing Out Credit Cards
A Bankrate Credit Utilization survey found that almost 20% of credit cardholders have maxed out a card since the Federal Reserve started raising interest rates, 27% of whom were Generation X. This can hurt your credit score, even if you pay off the balance in full.
Not Updating Retirement Goals
While the amount you need to save for retirement depends on your personal circumstances and recurring expenses, your savings goals should increase annually. This is especially true if you have significant debt.
Baby Boomers Are Overconfident and Underprepared
An overreliance on traditional assets and financial strategies can complicate things.
Relying on Real Estate
Old money rules don’t always hold up. Real estate is typically a great asset, but you must diversify your investment portfolio to build generational wealth.
Not Estate Planning
Baby boomers might not make the largest wealth transfer in history as expected. A study reveals 41% don’t have any basic estate planning documents. Despite this fact, 63% of millennials are counting on an inheritance.
Viewing Retirement As the Finish
Whether you want to pass on wealth to your inheritors, donate everything to charity or spend every penny you’ve earned, you must still budget in retirement to ensure you can continue affording your lifestyle.
Each Generation Can Achieve Lasting Financial Security
There is no one-size-fits-all solution to financial challenges. However, there are a few best practices that apply to almost everyone. Experts agree that investing is essential for growing wealth in the long term. Maximizing contributions to 401(k)s, IRAs and employer-matching plans will help you build a robust savings foundation.
Avoid investing in meme coins and finfluencer cryptocurrencies. Diversify your portfolio to minimize risk while maximizing savings. Remember, don’t chase trends — reserve the short term for saving, not investing.
If you feel like you don’t have much, you’re not alone. Federal Reserve data shows the average American has $8,000 in savings. Bank account balances range from $5,400 for those under 35 to $13,400 for those aged 65 to 74. You can make that money work for you by investing.
Overcoming Financial Challenges One Generation at a Time
Ideally, you should start saving when you first earn income. However, it’s never too late to start saving. Even small contributions add up over time. Revisit your savings goals and budget frequently to ensure you stay on track.
