Young Americans are switched on about the importance of good financial management and want to talk about it earlier than previous generations.
A new survey from Northwestern Mutual reveals that adult Gen Zs had their first family conversations about money when they were 15 and that’s the age most respondents from that generation believe is appropriate.
For older cohorts though, the poll shows how things have changed with Millennials saying that 16 is the right age to start having family finance talks, which is two years before the average age that this generation did so. Gen X agree that 16 is the right age but had to wait until they were 20. And for Boomers, who think 18 is the age to have money chats, their family waited until they were 22 for the discussions to start.
But family conversations about money also work the other way, with 47 the average age that poll participants think it’s right to start talking to parents and guardians about their wishes for their wealth. Around three in ten said that they have had these discussions.
When it comes to long-term care plans for parents and guardians, most generations believe such conversations should be when their older relative is in their forties.
“Talking about money with your family used to be taboo in society, but today, young people are changing the conversation,” said Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “Meaningful wealth discussions between generations are now happening earlier in life and more frequently. Beyond financial planning, these conversations are also moments to reconnect with children on values, hopes, expectations and the financial acumen they need to thrive today and long into the future.”
TRUSTED ADVICE
While Gen Z is known for its devotion to TikTok and other social media platforms, respondents from this generation did not rank online sources highly for financial advice.
Family members (28%) outrank other sources including financial advisors (22%), spouse or partner (12%), business news (11%), financial influencers/social media (6%), and friends (4%).
The Northwestern Mutual Planning & Progress Study also found that Gen Z are more trusting of family members’ financial advice than Millennials (19%), Gen Xers (12%), or Boomers (8%). These older demographics rank financial advisors as their most trusted source (25% for Millennials, 35% for Gen Xers and Boomers).
“I believe one of the emerging trends in financial services will be intergenerational wealth conversations,” said Gokhale. “In the coming decades, we will see the greatest wealth transfer in American history when Boomers shift $30 trillion in wealth, mostly to loved ones. But inherited wealth is not indefinite wealth, and many affluent families lose their accumulated wealth by the second generation.”
He added that he expects to see more financial advisors’ clients wanting younger family members to be part of discussions going forward.