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It has nothing to do with astrology. It has everything to do with economics.

2 minute read

The Center for Household Financial Stability is not a household name. Its run by the Federal Reserve Bank of St. Louis – and while I’m sure many people have heard of the Federal Reserve, they might not know it’s actually a system of 12 banks spread throughout the country.

I mention this not to bore you or insult you, but to explain a fascinating (and under-reported) research project. The St. Louis branch of the Federal Reserve recently released a report called The Demographics of Wealth 2018 Series, and within its 24 pages is some revealing information.

Most notably, the economist and two analysts who wrote this report explored “the connections between a person’s birth year and measures of his or her family’s financial well-being, including income and wealth.”

Basically, they’re wondering if the year you were born can predict how wealthy or poor you are right now.

How can they do this? Here’s what they wrote…

Based on data from nearly 48,000 families born throughout the 20th century, we found that families headed by someone born in 1960 or later were less likely to have recovered by 2016 than older families.

To be more specific, researchers showed that Americans born in the 1930s and 1940s certainly “lost wealth” after the Great Recession in 2007, but they didn’t lose as much as those born in the 1950s. However, all of them seemed to rebound by 2016.

“Cohorts born in 1960 or later, on the other hand, were moved well below benchmark levels by the Great Recession and remained below them through 2016,” the report says.

It’s not hard to figure out why this is. Overall, the older generations went into the recession with more wealth and less debt than younger generations…

The likely culprits for 1960s and 1970s families: houses and debt. Debt and homeownership are more likely culprits in explaining why families whose heads were born in 1960 and later were hit so hard by the Great Recession and have failed to recover completely. Beginning with families whose heads were born in the 1930s, each successive decadal cohort generally has piled up more debt relative to income at a given age than the preceding cohort.

Interestingly, researchers said owning a home and not having much debt was more important than making money. In other words, a higher salary didn’t matter, because many Americans of all generations can make a lot and still spend a lot.

Put it all together, and the ’80s were a bad time to be young…

Families whose heads were born in the 1980s are different. They generally were too young to be homeowners during the housing bubble; in fact, only 19 percent of 1980s families were homeowners in 2007. Even by 2016, fewer than 45 percent of 1980s families were homeowners. The predominant type of debt they owe is non-mortgage debt, including student loans, auto loans and credit card debt.

Of course, being born in a certain decade doesn’t doom you to a life of debt. That’s why I recommend credit counseling to Americans who are struggling – regardless of the year of their birth. This is economics, not astrology. I’m not qualified to tell you if fate and destiny play a part in our lives, but as a CPA and financial author, I can say without reservation: You control your finances, and you can even get help to do better.

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The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the opinions and/or policies of Debt.com.

About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC