This paper addresses the challenges in developing language models for less-represented languages, with a focus on Luxembourgish. Despite its active development, Luxembourgish faces a digital data scarcity, exacerbated by Luxembourg's multilingual context. We propose a novel text generation model based on the T5 architecture, combining limited Luxembourgish data with equal amounts, in terms of size and type, of German and French data. We hypothesise that a model trained on Luxembourgish, German, and French will improve the model's cross-lingual transfer learning capabilities and outperform monolingual and large multilingual models. To verify this, the study at hand explores whether multilingual or monolingual training is more beneficial for Luxembourgish language generation. For the evaluation, we introduce LuxGen, a text generation benchmark that is the first of its kind for Luxembourgish.