Younger Americans Actually Want to Have These Tough Conversations
Tough conversations are inevitable. At some point, every parent is faced with having a difficult conversation with a child—from the notoriously awkward sex ed talk to topics surrounding grief, safety, and even politics these days. Some conversations are sensitive, whereas others are just plain embarrassing (for both parties involved!). Trust me, with 3 daughters in the family, Jill and I have had plenty of these over the years.
One topic of discussion that we felt was critical to have with the girls was about finances. As an advisor, I naturally started having these discussions early on to help them understand the value of a dollar and how to create good financial habits. And while money talks aren’t as touchy as, say, personal hygiene conversations, they are just as important. My girls may have not appreciated the trade-offs they suffered through in their teen years when I made them save 40% of their babysitting money for a rainy day, but they’re coming around to the value of my advice. As they enter adulthood and have their own bills to pay, those conversations are starting to pay dividends for them. This applies particularly to Maeve since she has graduated and working as a nurse at Duke Hospital in Durham, NC. Phoebe and Sophie are still in college.
And with the plethora of advice and investment gurus online, I appreciate their trust in me on financial matters. And interestingly enough, it seems that many of today’s youngsters – Gen Z I believe they’re called – are more open to financial advice from those close to them than influencers online. Gen Zer’s are about 12-25 years old, making them the perfect age to begin these conversations. So this week, let’s look a little closer at this younger generation and their approach to the tough conversations.
A new study by Northwestern Mutual Study¹ finds that today’s youth want to talk about a number of important financial topics such as wills, life insurance, inheritance and even long-term care plans a full decade earlier than Boomers did. These younger Americans say they are ready to have conversations about more sensitive family financial topics earlier on in life. From family budgets to inheritances to estate planning, the time to talk is trending sooner.
According to the study, the average American says the right time to talk with kids about their family’s financial situation is at age 17. However, the research discovered some significant differences across generations: Boomers reported that they had that first family conversation when they were 22, while Generation Z had it seven years earlier at age 15.
These discussions between generations are now happening earlier in life and more frequently. The study found that Gen Z is the most likely to consider family members as the most trusted source for financial advice, followed by financial advisors. These sources score 15-to-20 percentage points higher than the often-popularized “FinTok” influencers on social media.
Given the significant wealth transfer expected to pass between generations in the coming decade, (Boomers are estimated to have a whopping $30 trillion in wealth coming to their loved ones!), these conversations are coming at a crucial time. It’s not surprising that wealth is often lost as it is passed from one generation to the next, so these conversations are a prime opportunity for parents to counsel their children on how to invest and manage money for decades, if not additional generations.
These conversations are not limited to just our children’s needs, either. According to the study, over four in 10 (43%) of U.S. adults have talked to their aging parents or guardians about long term care and other health related preferences. Here again, we’re seeing signals in the data showing younger generations are placing a greater priority on having those conversations sooner rather than later, setting themselves up for less anxiety when the time comes to make these hard decisions.
At the end of the day, determining when to have these discussions is a personal decision that each of us needs to make for ourselves. But families should have these challenging conversations at some point, because if they don’t, loved ones may need to make difficult decisions on their own. And the benefits of these discussions go beyond financial planning, too; I have found that these conversations help me as a dad to reconnect with my girls on values, hopes, expectations and the financial acumen they need to thrive today and long into the future.
So as always - be vigilant and stay alert, because you deserve more!
Have a great week. I hope everyone is having a wonderful Holiday Season.
Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA.
Insurance offered through its affiliate, CutterInsure, Inc. We do not offer tax or legal advice. Jeff can be reached at jeff@cutterfinancialgroup.com. This information is intended to provide general information. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain a better understanding of the subject of the article. Different types of investments involve varying degrees of risk, including the potential for loss. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Market data and other cited or linked-to content is based on generally available information and is believed to be reliable. Cutter Financial does not guarantee the performance of any investment or the accuracy of the information contained in this article. Cutter Financial will provide all prospective clients with a copy of Cutter Financial’s Form ADV 2A, Appendix 1, applicable Form ADV 2Bs and Form CRS as well as the firm privacy policy. Please contact us to request a free copy via .pdf or hardcopy. 1. https://tinyurl.com/yezvh73v
