You may already be helping your children in some way financially, but perhaps feel you could do more. Whilst they may be grateful for the support, there are those who will be defiantly independent and want to achieve their objectives on their own.
Understanding the different generations – and their attitude to wealth – is a good starting point for intergenerational wealth planning. Your own family may not be stereotypical, but there will be common elements that shed light on how best to pass on some of your wealth to them.
Gen X and Millennials
Those born after the Boomers, between the mid-1960s and late 1980s, make up the generation now known as Gen X. Dubbed as the ‘MTV Generation’ during adolescence and young adulthood, they were characterised as slackers, cynical and disaffected. In midlife, research describes Gen X adults as active, happy, and achieving a good work-life balance. They have been credited with entrepreneurial tendencies. Although they have learned to embrace and be more open to diversity, a “what’s in it for me” attitude has prevailed. They are certainly better educated and more decisive than the generations before them.
Generation Y, or Millennials as they are more widely known, are those born in the 1980s through to roughly 1996. I would include my own children here who, having grown up with technology, are accustomed to all the gadgets, and have been raised during the advent of social media.
They will feel less fortunate than you, although some, possibly with your help, have bought their own homes. But they haven’t had access to the guaranteed pensions and the continuity of employment that can contribute to the accumulation of capital. Climbing living costs, starting their careers during or shortly after recession, and stagnant wages have earned them the moniker of “generation rent”.
Certainly, we have helped fund our children through university, bought their first cars, helped them with deposits for a house and provided other financial support over the years. None of it was asked for, mind you, but all was thankfully received.
Gen Z and beyond
Generation Z covers those born in the late 1990s to the early 2000s. They live in an age of high-tech communication, technology-driven lifestyles and prolific use of social media. Like their parents, they tend to be more enterprising, they will plan more and have a greater global outlook.
Sometimes, the next generation does not understand the blood, sweat and tears that has gone into creating wealth, and may not appreciate the value of money. Some heirs are not motivated to develop a bias towards diligence, thrift, delayed gratification or developing relationships with others who contribute to wealth accumulation.
Putting it all together
Do you recognise any of your children here, or even grandchildren? How do you think they will appreciate and use the money that you give to them? Can you see them blowing it all on fast cars and living, or will they be prudent and invest some of it, pass some on to their own family, use it to start a business or just get rid of debts?
Start a friendly conversation with the younger ones about their hopes and dreams. Getting to know your family well and understanding what they want from life can assist you with your own planning.
Are there likely to be more grandchildren or great grandchildren to consider in the future? If a family business is involved, do not assume your children will want to be part of it and take it over after you.
Most importantly, how well do you and your family members get on and communicate?
Remember, whilst you may be passing on wisdom and riches to the next generation, they can teach you things too – you may be surprised by their expertise, abilities, and wisdom. Whilst it is good to have some general understanding of the different age groups, there is nothing better than sharing ideals and knowledge.