Dear Friends-

Ever wonder where your paycheck goes? Does it feel as if one day the money’s in your checking account and then — poof! — suddenly it’s gone?

Relax. If you’re a Baby Boomer* or the child of a Boomer, a.k.a. an Echo Boomer,** even if you don’t have a clue, the folks at VISA USA know where, on what, and on whom you’re spending this money.

Wait! Even if you’re not a Boomer or an Echo, this is important information. Because of the sheer size of these two demographic groups (each number about 76 million individuals) how they spend their money in the years ahead has the potential to move markets.

According to VISA USA Chief Economist Wayne Best, Boomers and Echoes are “the powerhouses of U.S. consumer spending.” It’s estimated they account for more than $4.2 trillion dollars in spending today, with Boomers responsible for the lion’s share: $3.8 trillion. No surprise given the fact that Boomers are in or nearing their peak earning years.

However, as more and more Echoes move into young adulthood, their economic clout will grow significantly. VISA USA projects that in eight short years, the spending power of Echoes will increase six-fold to $2.4 trillion, while that of Boomers grows to $4.6 trillion. Combined, these two generations will be responsible for more than 50 percent of total consumer spending.

An investor who had paid attention to this type of demographic trend when early Baby Boomers were still in diapers would have made a pretty penny.

Follow the Money

Most demographers agree that the baby boom started in 1946 when, thanks to G.I.s returning home from World War II, the U.S. birth rate began to climb for the first time in years. It continued at an elevated level for 18 additional years.

Imagine if you’d had the foresight to recognize the financial power this generation would wield throughout its lifetime! The sharp increase in the number of babies being made — and needing to be fed — catapulted Gerber to the position of best-performing stock in 1953.

As Boomers moved into childhood, and grew into rebellious teenagers, other companies that appealed to this generation enjoyed similar results: Wamo (Hula Hoop, Frisbee) in 1957; Capitol Records (The Beatles) in 1963; and Levi Straus in 1967. Residential real estate boomed in the 1970’s as Boomers began to marry and settle down.

Boomer Kids Begin to Flex Their Economic Muscle

It probably comes as no surprise that both Boomers and Echoes currently spend most of their income on housing, either in the form of a mortgage or rent. (In fact, the federal government’s Consumer Expenditure Survey reveals that this is an individual’s No.1 expense regardless of age.)

However, Boomers start to show their age with 50 percent citing "Medical or Dental Costs" as their second largest expense. (Of course, many Boomers still have teenage Echoes living at home, so this is probably a contributing factor.)

What’s surprising, given the relatively low current incomes of Echoes, is that both generations agree that “Eating Out” is a significant monthly expense. Forty-five percent of Echoes and 43 percent of Boomers mention dining expenses.

Granted, for Echoes this may mean a fast food joint while Boomers might tend to frequent places with tablecloths.

Just Like Dear Old Dad/Mom

Given the fact that most Echoes grew up in Baby Boomer households, I suppose it should not come as a surprise that they have similar attitudes about spending and that these attitudes often conflict with their actions.

For instance, nearly eight out of 10 Boomers are “very/somewhat concerned” about having adequate income in retirement; surprisingly, given their current ages, 7 out of 10 Echoes are also concerned about this. In addition, more than 80 percent of both demographic groups claims to “stick to a strict budget when making purchases.”

However, their concern about future income and self-professed commitment to thrift would seem to be contradicted by the fact that at least 40 percent of Echoes and Boomer say they spend more than they earn. This is an especially curious finding in light of the fact that 48 percent of Echoes describe themselves as “savers.”

In addition, at least two-thirds of the individuals in both groups admit they need to manage their spending better. Specifically, a significant number (43 percent of Echoes; 27 percent of Boomers) name “going out to restaurants” as the first expense they should reduce.

The More Things Change…

There’s also a disconnect between how the two generations see each other. While one in three (36 percent) Echoes say they look to those in the Boomer generation for clues on what to buy, only one in five Boomers seeks out the advice of someone in the younger generation. Peer influence is by far the biggest factor in both groups.

Sixty-eight percent of Echoes say they admire those in their parents’ generation. However, this esteem is not reciprocated. The same percentage of Baby Boomers think the Echoes are “too self-centered and focused” on their own needs and wants.

Pardon me, but that has a very familiar ring to it! (Are you listening, Boomers?) Moreover, the fact that more than half of Boomers report they like to “splurge” on their children, (i.e. the Echoes, and grandchildren) you have to wonder who made the Echoes that way?

Which Companies Will Benefit?

Since you’ve read this far, here is the promised list of categories where these two giant generations currently like to spend their money. Just keep in mind that millions of Echoes have yet to reach age 18, and that there’s a chance (don’t hold your breath) that their buying behavior might be different from their older brothers and sisters. In addition, the spending patterns of Boomers will morph as they begin to retire and move out of the workplace.

Still, as things stand now, after “housing,” the main categories both Boomers and Echoes are likely to spend their money on are:

Eating out at restaurants


Medical or dental costs

Entertaining family & friends

Entertainment outside the home (movies,concerts, clubs)


One more thing, about 75 percent of the individuals in both generations believe that one day we will be a cashless society, that writing a check or paying in cash will be as quaint as spats or buggy whips.

Just what the folks at VISA USA wanted to hear.

Hope this helps,


*Baby Boomers are those born 1946-1964.

**Echo Boomers are those born 1982-1994 (This survey used 1979 as the starting year.)

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.