How To Give Financial Advice To Your Millennial And GenZ Kids
Many Boomer and GenX parents are both puzzled and frustrated by their children’s finances. Are kids these days really blowing money that could be used for a house down payment on lattes and avocado toast?
Acknowledge that times of have changed
One of the main points of contention between Boomer or GenX parents and their young children is the lack of understanding about how much the world has changed over the past 30 years. Where you may have been to work summers to pay your university tuition, or qualify for a mortgage with the salary of your first job out of school, most young people can’t.
As post-secondary tuition and real estate prices have skyrocketed, Millennials and GenZ have gotten caught in a perfect financial storm. They’re graduating in the red only to enter a competitive job market with low starting salaries and no pensions. They barely have money to make rent after they pay their student loan bills. With nothing leftover to save, they’re missing out on getting a foothold in the real estate market or investing for retirement.
When your children speak up about the challenges they’re facing with money, hear them. Before anything else, they need to know you see what they’re going through. They don’t want to be blamed for lattes or avocado toast. They want their parents who have supported them their whole life to continue to do so, and that starts with listening.
Help young adults develop good financial habits
When you hear where your young adult children are struggling with their finances, you’re better equipped to give them financial advice that will actually help.
Many young people are so daunted by the task of saving and investing for retirement, they don’t do it at all. Let them know that even if they only have $50 or $100 each month to spare, it’s worth it to get started in the stock market. Help them choose between a TFSA and RRSP so they can really start building a nest egg for themselves.
Also take the time to help them draft a budget, explain to them how a credit score works, and how to manage debt.
Remember, good financial habits probably come naturally to you after decades of managing your money but your kids are new at this! Teach them about money the same way you taught them to walk or to read.
Speak frankly about financial mistakes
One of the reasons talking about money is so fraught is because many people feel a lot of shame when they screw it up. This is especially true if they have to tell their parents about their mistakes!
Your children idolize you and want to make you proud. They may not be sharing their entire financial picture because they’re afraid of how you’ll react if they confess they have thousands of dollars in credit card debt, or they made a bad investment on a stock IPO that went bust.
One of the ways you can build trust is to share your own money mishaps. It can be hard to share moments where we were less than perfect, but if you’ve learned from your mistakes, you can pass on the lesson to your kids so they don’t repeat it. Sharing times where you’ve gotten into trouble with debt or had an investment sour will also show your children that financial mistakes are something you can recover from.
Just give them money
Yes, you read that right. If you can afford it, reach into your own pockets to help your adult children out financially.
I know you might be tempted to teach them to “stand on their own two feet”, but this isn’t possible if they’re drowning. Many parents worry that if they help out their adult children too much they’ll never learn to be financially independent. In reality, withholding financial support can actually be sabotaging your children from ever enjoying any financial security.
If your child is struggling under hefty student loan payments, high childcare costs, and low salaries, they can’t “get better with money” because there is simply no money to manage. If you can gift your child a down payment, help them pay for their wedding, babysit your grandchildren so no one has to pay for daycare, or even can pay off your child’s credit card or student loan debt, do it. It will help get them to a place where they can actually start gaining some financial traction.
The only thing to keep in mind is not to help out your adult children to the detriment of your own finances. Some parents are overly generous and will bankrupt themselves to pay for their kids’ education or other needs. You cannot sacrifice your own financial security for your kids, it will only create the need for them to bail you out later.
Related: Leave a legacy before the will is read
Managing money and achieving financial security is hard no matter what your age or what generation you’re from. The best way to help each other is to recognize each other’s struggles and work towards a better outcome together.
Bridget is the founder of Money After Graduation, a financial literacy website dedicated to empowering Millennials and GenZ to better manage their money.
Excellent post! I will pass this on to my adult children who soon will be needing this guidance. I have witnessed several parents in their 70’s and 80’s lend money to their adult kids and then lose their homes. Sad!!!
Really great post. Thanks for writing it. Times have definitely changed.
Quit whining. Your kidding right? Just give them money? Nope.
I will concede that wages are not keeping up with COL but that is the future whether you like it or not… reduced standard of living. The younger gen makes it sound like we finished school bought a house, two cars, and had a family. Not so. Worked two jobs and walked or bused everywhere. The only time my economic situation looked better was with a spouse sharing costs. Otherwise no house or nice car. So choosing to not get educated or married is a CHOICE not something thrust on you by the last generations over indulgence.
This generation seems to value $5 lattes, $100 haircuts, $150 monthly phone charges, $200 Uber monthly (What?? take the bus??), organic groceries, designer clothes, etc. Plainly they are the newer generations that have never experienced poverty or war and because of that are spoiled and entitled, even demanding of their parents $$.
My son spent $50K ($$ from us and scholarships) the first year of Uni, mostly beer, parties, and motorcycling. When he hit bottom and was broke he lived in his car. His choice……. drank 3-4 power drinks and smoked a pack a day ~ $30 day still while car living.
Daughter similar but not as bad. Have a deal with her now we will match her monthly RRSP contributions up to $200 monthly. Up side is she gets the $750 tax return the following year. SO saving for retirement and some free money.
Wait until the Covid payback begins with more tax……. 8% GST maybe, that will reallly hurt
You’ve also made the choice to give your daughter money in the form of matched RSP contributions, so I’m not sure why you seem so initially upset at the suggestion of providing money to one’s children.
He’s trying to teach good money habits by giving her an incentive to save. This is similar to a gift, but distinctly different as the matching concept does teach good money habits, while the gift will often teach very little.
And some families have it figured out that even with “gifts” there can be a financial education and lessons taught at the same time. However, many families do NOT have the financial education and lesson part figured out, and they unfortunately create a dependency situation, which is what you want to try and avoid.
It’s ok to let children struggle a little, even important. But it’s also ok to help them out. Many parents give money to their children to help them get started in their lives, others don’t… and to think one approach is better than the other I think is a judgement that is unfair if you are not a part of that family dynamic.
True insight Aaron, I get a little heated when rethinking those days. We tried best practices and saving but they went to a private high school (we scraped to do this) and were surrounded by a over indulgent mindset of kids who had $1000/month allowances. REALLY screwed their money management. It ended well as both learned hard lessons (hard on Mom and I too). Worked out in the end as they both are independent and my daughter an awesome saver. My daughter has a BSC and BEd teaching HS and my son is a Captain (pilot) in the RCAF flying SAR saving lives. That was a tough stage though. Too many people spoil and coddle their kids and end up spending their retirement nest egg.
Thanks Cam, happy to hear it worked out well in the end. Sounds to me like you have a lot to be proud of. Good work mom and dad!
Parents need to stop spoiling their kids, as these expectations carry on into adulthood. My kids only ever got big gifts at birthdays or Christmas. Anything else, they needed to save their money for. They never went without anything though. My kids are all now good with their money and can’t believe how their friends waste so much but then whine when they can’t afford to buy a house or have a big wedding. I did pay for my kid’s education, but I did tell them that this is the greatest gift I could give them. I will not be paying for big weddings etc., they need to save for that themselves though.
Thanks for this post. I’ve seen so many young people starting their careers in their 20s with low salaries and temporary contracts – and still into their 30s they cannot get a continuing position, just more 1-3 year term contracts. It’s crazy! As temporary employees, even in the public sector, many won’t get benefits or pay into the pension plan.
We Boomers take this for granted when we had pensions, annual cost of living adjustments, employer matching savings plans, and generous benefits throughout our careers (which often were with one employer – not the half dozen or more that young people will have throughout their working lives).
30 years ago a high school diploma could land a good paying job with a pension and benefits. Today, even with these term positions, employers want a degree at minimum, plus an MBA or Masters to stand out. If I had those qualifications I certainly would be expecting more than $30k a year and a job guarantee beyond 1-3 years.
We offer contracts to employees we see as “expendable” and can jettison if things get worse. A star is offered full time and pension benefits. Good time for inner reflection. Change jobs, change focus, re-evaluate your value to an entity. IF it all comes up roses for you (have a third party help in the process) then move on and leave that company. If your field has this type of problem ditching them and moving may help. So many times we here people saying it is to expensive to live here. My answer THEN move! As long as people work for peanuts and complain but do nothing about it the longer it will persist
Always some interesting and varied viewpoints. There is a time to help but only if it is to teach them to fish and not provide the fish so that it is long lasting. I financial coach young people as a “hobby” and see all sorts of challenges for many of them and also lots of “self inflicted” wounds so some truth to both sides.
I have one major point of difference with the writer and that is helping out with a down payment. If they cannot save something for a down payment then how will they ever come up with the funds to fix a furnace or a roof or a car repair or ……
For many people the correct answer is they do not make enough to own a house. There is a book called When Helping Hurts and I believe that this can be the case for many young people. We were fortunate enough to be able to help our son when he bought a house but the deal was that for every $ he save we would match but the house had to be for a price that worked at his current salary and not just buying a bigger house.
For everyone that says housing is too expensive (excluding places like TO and Van), you can buy a place for $160k in Calgary so payments would be very reasonable. Buy something better when you can afford it.
Our first house as a couple was paid for in about 5 years…….we did not make a lot of money but we bought a small house based on one income and then used my wife’s income to double up payments every month till our son came along. The bank approved us for a house 2.5x the size we bought…..we resisted. The house would have taken longer to pay off except we received my inheritance that allowed us to pay the rest off early. This was in total $15,000……so there was no big amounts involved. Just a focus on enjoying what he had not what we could have.
Buy small and amortize over 15 years (if you can afford a house).
Excellent post!! Talking about money is often emotional and boring but it is critical. Robert Kyosoki writes about how the rich educate their kids about money very early on but everyone else shies away from the subject. Both our boys (ages 26 & 24) worked partime jobs throughout university to help pay their way and minimize their post graduation debt load. I did it. My kids did it. People who subscribe to the notion that the school workload is different now or that the jobs don’t exist are breeding a “woe is me” mentality of the younger generation. As parents our job is to support our kids and inspire them to achieve their full potential. To help them live a full life. If parents have extra cash what better investment opportunity exists than investing in your children – providing they are earning it as well. Inspire Kids. Educate Kids. Share your finances with your kids. As a sidebar, both our kids own their own homes. It can be done.