.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} The spending habits of the younger generation concern me. Is this another sign that I’ve morphed into my parents or are my observations correct that people in their 20s and 30s are quick to acquire what they want, slow to save and prone to load up on debt?

A new study on Generation X by the Joint Center for Housing Studies at Harvard University confirmed my suspicion. The study concluded that although Baby Boomers still lead in total spending, individuals born between the mid-1960s and the mid-’80s are spending more per household, reflecting their general tendency to spend more than their parents. My thoughts immediately turned to how these spending habits affect the economic future of Iowa and of the nation.

Generation Xers have grown up for the most part in a robust economy and in a brand-oriented world that encourages purchasing the latest version of the newest thing. They have also grown up watching their parents generally buy what they want and operate in an environment where saving is the exception, not the norm.

In 2006 the U.S. savings rate reached its lowest point since 1933, when our country was in the depths of the Great Depression. According to the U.S. Department of Commerce, our national savings rate is at a negative 1 percent, much lower than those of comparable industrialized nations. Americans on average not only spend all that they earn, but also borrow or spend savings to meet expenses.

Why should Gen-Xers be worried about issues like a low national savings rate, high rates of debt and excessive spending? As long as the general economy is steady, interest rates remain stable, the housing market is good and the dollar is healthy, all is well. As long as no one experiences layoffs or pay cuts, has adequate health insurance and no expensive emergencies, everything should be fine.

Unfortunately, it’s unlikely that every aspect of the economy will remain unchanged. If interest rates increase, and consumers have to fork out more money to service consumer or adjustable rate mortgage debt, they’ll have less disposable cash for other purchases. If gas prices continue to rise, cash flow will be crunched as well. If people lose a job or have a medical emergency not covered by insurance, where is the cash cushion to help them through this period?

The combination of low savings, debt and excessive spending leaves individuals very vulnerable to changes and has significant consequences for the larger economy as well. Fewer dollars available as savings to banks and other financial institutions can push interest rates higher for both savers and borrowers. That makes it more costly to finance investment in industry, which slows growth in national output and income levels.

The Harvard study simply reported on Generation X’s spending patterns, not on the consequences. Though those spending habits might be great for various retailers, members of that generation might want to rethink their financial behavior so that they can plan for prosperity – not problems – down the road.

Suzanna de Baca is the president of Private Capital Solutions Group, an investment and financial advisory firm based in Des Moines.