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.
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.