If you’re a Boomer or Gen X, do you remember your parents talking to you about money? I sure don’t. And my father was the assistant VP at a large regional bank. He offered me one piece of financial advice that I remember: “Wholesale is better than retail.”
I don’t know if he was trying to encourage me to open a small business or a flea market booth (it was circa 1982, after all) or just teach a level of frugality that I never saw in our household. He never taught me the “pay yourself first” principle, as far as I can remember. He did explain the concept of compound interest, but I had a passbook savings account that didn’t compound very quickly.
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I remember my mother getting her first credit card, a Discover rewards card that earned cash back, shortly after he passed away. She paid it off every month. I never lacked for anything growing up. But I didn’t understand, and wasn’t taught, how money magically provided everything I needed and most of the things I wanted.
Just like sex and death back in the ‘80s, money wasn’t discussed in our household.
Younger generations have moved past some of these hangups about discussing money, but some resistance persists, according to a new survey published by Vericast.
Talking About Money: Generation by Generation
A majority of people across generations said they are “very open” with their family about finances. Almost three-quarters (72%) of millennials said they’re very open with their family about finances. More than two-thirds (68%) of Gen Z said the same, followed by 63% of Gen X. The smallest percentage, 56%, of Boomers said they’re open with their family about finances.
Meanwhile, 41% of Boomers still avoid financial discussions, compared to 39% of Gen X, millennials and Gen Z.
Boomer Money Avoidance: Privacy, Greed, or Fear?
There are many reasons people across generations avoid money talks. While Boomers could have set an example of openness, they didn’t have the resources younger generations have today. There was no one to teach them.
“[Boomers] weren’t necessarily taught how to talk about money. Their parents treated money as something you didn’t discuss at the table,” said Fred Cadena, SVP and managing principle at Vericast.
That reflected my personal experience, too. Although I’m Gen X, my parents were part of that Silent Generation, born between the Greatest Generation and Baby Boomers. Past generations had employer-sponsored pensions, a solvent Social Security fund, and not as many questions about the future.
“There was genuinely less to coordinate with family back then,” Cadena said.
Cadena also believes there’s more to Boomers’ reluctance to talk about money, but it’s not what many people think.
“The story people often tell is that the Boomer generation is sitting on a pile of money and guarding it. That’s not always what’s happening,” he said.
Boomers, Cadena asserted, may be keeping quiet out of fear or uncertainty, not greed.
Whether you’re discussing their future inheritance, the financial help you can offer adult children now, or even what it might cost if you need to enter a nursing home or assisted living later in life, it’s difficult to pinpoint a specific dollar amount.
“The moment you name a number, you feel like you’ve made a promise,” Cadena said.
What Changed with Generation X?
Gen X began to reverse the trend of talking about money, most likely out of necessity. Squeezed between taking care of older parents and potentially funding adult children, while battling debt and struggling to save for retirement, Gen X is forced to discuss money.
A recent Wells Fargo survey revealed that 64% of parents with children ages 18 to 28 are supporting those young adults financially in some way. More than half (56%) said their own finances are feeling the strain from it. Meanwhile, 46% of Gen Z described their financial lives as “messy.”
Gen X has to discuss money to set boundaries and protect their financial future. Our willingness to talk about money may also stem from wanting to help our children avoid the challenges we face.
“When you’re disclosing a shortfall instead of an estate, the conversation becomes a warning. Warnings can be easier to give,” Cadena said.
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Millennials and Gen Z: Mostly Willing To Talk About Money … Except Those Who Aren’t
While a higher percentage of millennials and Gen Z (72% and 68%, respectively) said they are “very open” with their family about finances, those who don’t want to discuss finances are adamant about it.
Nearly one-third (32%) of both Gen Z and Millennials said they’d “rather eat a bug than have finance conversations.”
Information, Not Help
A percentage of both Boomers and Gen X believe it’s best not to get involved in family finances. One-in-five (19%) of Boomers said that family involvement is a “negative,” while 15% of Gen X (the highest percentage of all generations) believe that parental guidance can lead to adult children becoming “too financially dependent.”
However, 92% of survey respondents said they think younger generations will receive the most up-to-date information if parents are involved in financial decisions, ranging from choosing a bank to managing debt. More than one-third (36%) said that getting input from an older family member leads to better financial outcomes.
The bottom line: It’s great to share financial knowledge and brainstorm with children, even before they reach adulthood. But at some point, it’s okay to stop being “The Bank of Mom and Dad.”
Filling Financial Gaps for Your Adult Children: Helping or Hurting?
Cadena advised looking at adult children’s financial needs as either a “hole” or a “gap.” A gap, he said, is something like an emergency car repair, a move, or temporary unemployment. A hole means their income consistently exceeds their expenses.
“It can be difficult to assess from the outside, which means it may help to ask for a clear picture of income, expenses, debt, and the specific shortfall,” Cadena said.
But, he warned, the money you offer should be determined by what you can give comfortably rather than what your adult children need. Don’t borrow from your retirement or borrow against your house if it will create a retirement shortfall.
“The kindest thing you can do for your children is not run out of money at 80,” Cadena said.
