Gen X, Millennials And Gen Z Heavily Underprepared For Emergencies

If there is one thing that is certain in life, it’s the uncertainty of security. It could be a sudden medical emergency, an unexpected job loss, or any urgent home repair, the need for financial readiness can come around without warning. A recent report reveals that a significant chunk of India’s workforce across three generations is underprepared to handle the curveballs that life presents.

The study by 1 Finance, a personal financial advisory firm, conducted over 2 and a half years across 124 Indian cities finds that 24 per cent of Gen X, 53 per cent of Millennials, and 59 per cent of Gen Z admit to being unprepared for emergencies.

This isn’t just about numbers. These stats reveal how generational experiences shape financial decisions, often leaving gaps where they matter most.

Gen X: Stable But Cautious

Born between 1965 and 1980, Gen X earns the most among the surveyed groups, with an average annual income of Rs 51 lakhs. On the surface, this cohort seems financially secure. They are known for their preference for stable investments like real estate — a whopping 37 per cent have overallocated to this asset class.

But dig a little deeper, and the cracks appear. Nearly half of Gen X participants (45 per cent) lack sufficient emergency funds. Their financial safety net might be stretched thin by other commitments, such as home loans or children’s education. However, this age group also stands out for being overinsured in some areas, with 42 per cent holding more health coverage than needed and 34 per cent overinsured on term policies.

Millennials: The Multitaskers Under Duress 

Millennials (the age group between 27-42 years) are in the thick of their careers while balancing both personal aspirations and family responsibilities. However, with their average income of Rs 31 lakh, this group often faces competing priorities leaving them ill-prepared for unexpected expenses. The report shows that 53 per cent of Millennials fall short when it comes to emergency funds. Their investments also tell us that 54 per cent are underinvested in real estate, and a staggering 65 per cent have not allocated enough to equity, a growth-oriented asset. Adding to their financial challenges, 35 per cent of Millennials carry “very high” bad liabilities, making them more vulnerable in a crisis. However, here’s what stands out in the millennials’ financial behaviour; they show a lukewarm approach towards retirement planning. Only 46 per cent invest in the National Pension System (NPS). Typically viewed as a generation that strives for work-life balance, such a reluctance to plan for later years could be a tell-tale sign of challenges down the road when it comes to retirement planning.

Gen Z: Learning on the Go

For Gen Z, born between 1997 and 2012, financial independence is still a relatively new concept. With an average annual income of Rs 16 lakhs, they are just starting. Yet, this generation has the highest percentage of individuals underprepared for emergencies at 59 per cent. This group’s inexperience in major life milestones is a reflection of their financial choices. Around 85 per cent are underinvested in real estate, a factor that can be understood given their age group and affordability issues in the current realty market.  However, the red flag in financial planning is visible due to tier risky behaviour with debt. A concerning 66 per cent are overallocated to debt instruments, and 33 per cent have dangerously high liabilities relative to their assets. Insurance, a very significant aspect of financial security, is another weak spot for this group. Around 69 per cent of Gen Z lacks adequate health insurance and 77 per cent are underinsured in terms of term coverage. 

Emergency Unpreparedness: The Common Thread

Though the reasons vary, financial unpreparedness to tackle emergencies is the common thread between all groups. For Gen X, it’s likely a result of focusing too heavily on traditional investments like real estate. Millennials are spread thin across loans and lifestyle needs. And for Gen Z, limited incomes and a lack of financial education may be to blame. The solution? Most financial experts stress the importance of the “3-6-9 rule” - this translates to saving enough to cover three to nine months’ worth of expenses. This applies to all generations, regardless of income or life stage. Additionally, addressing the gaps in health and term insurance is critical, especially for Gen Z.  Life doesn’t come with a warning sign. The question is: Will you be ready when the unexpected knocks? For Gen X, Millennials, and Gen Z, the answer depends on the steps they take today.