Is it time to close the Bank of Mum and Dad?
With over 30 years of experience in the financial services industry, we have noticed one clear trend – each generation has a different attitude towards money.
Baby boomers; those born between 1946 and 1960 (aged between 58–72), are either in or nearing retirement. Naturally, they are focused on growing their wealth and leaving a legacy. Throughout their working life, they had a strong belief in the value of saving money which helped them accumulate assets such as property, or things that hold their value. Their purchases were based on quality and value. When making large purchase decisions, predictability and security was front of mind. They were always in control of their money and had a lot of discipline, always planning for their future and willing to spend money to live in comfort.
Generation X; those born between 1961 and 1989 (aged between 29-57) are generally parents, own their first or second home, and feel like their financial obligations are never-ending. Their purpose is financial security, always striving to better the living standards for themselves and their children. To them, improving their living standards means allowing their children to go to good schools and participate in more after-school activities, have a steady and secure job and place high-value significant events in their personal and family lives.
Millennials; those born between 1990 and 2000 (aged between 18-28) grew up in a time of rapid change, giving them a set of priorities and expectations vastly different from previous generations. They value experiences rather than owning assets or having financial security. They have a positive attitude towards debts (only if they can pay it back), seeing it as a step towards the future rather than a step back.
The attitude of each generation, towards money, is not just a trait of an age group but is also a snapshot of the economy at that time. With a rapidly changing environment, it’s nearly impossible to predict what the living and retirement standards will be when it’s time for Generation X and, even more so, Millennials to retire.
There are several concerns Baby Boomers and Generation X are already facing. For instance, a number of retirees are outliving the wealth they have accumulated over their working life. This means, they may not have any assets to leave to their children or grandchildren.
The biggest mistake we see people make is not taking care of their money until they are at the end of it. People tend to think of financial planning is a way to solve money issues, but it’s more than that. It’s about bringing dreams to life by identifying your goals and putting a plan in place to get you there.
Having a financial plan is crucial to having a happy and wealthy retirement. The earlier a plan is put in place, the better the outcome. If you don’t have a financial goal and plan, it’s probably a good idea to speak to a Financial Planner as soon as possible. Every generation has options they can apply now to set themselves, and their families, up before they are faced with irreversible financial issues.
It’s probably also a good idea to close the bank of mum and dad and allow your children to learn how to manage and grow their wealth independently and reach their full financial potential.