Money mistakes and successes of millennial parents
Millennials, defined as people born between 1981 and 1986, are now all grown up. Are they good with their finances and as parents?
Just like any other generation, millennials also make money mistakes, but they also have money successes. And for an age group that was once unfairly dubbed the most narcissistic generation of all time, they have shown that they are actually pretty good parents too.
Millennials, defined as people born between 1981 and 1986 are now all grown up. They are known for their ‘positive parenting’ style, great concern for their children’s safety and their diligence in saving for their children’s future. They have a world of information at their fingertips and are not afraid to consult the internet to find the answers to questions about their children,” says Claire Klassen, consumer financial education specialist at Momentum Metropolitan.
“Naturally, this access to information results in more informed and therefore more empowered individuals and in turn this affects their relationship with money and what their children learn about money.”
She says that there are a number of things that millennial parents do better than previous generations when it comes to how they approach their finances and what they teach their children, whether they realise it or not.
Active interest in their finances
“Millennials grew up in the age of the internet and as a result they are used to hunting for the information they need. How can you expect them to accept something you tell them at face value, when answers are just a click of a button away?”
According to the 2022 Investopedia Financial Literacy Survey, this generation is the most confident and invested in their financial future. They are keen on educating themselves and excited to participate in online financial courses.
“This influences how they approach their finances. Their children see that it is important to take an active interest in their own money.
They believe in saving
South African millennials lived through two or three global recessions, apartheid, load shedding and a pandemic. They saw a lot and learnt to be prepared for a rainy day, building up emergency funds.
They also believe in saving for their children’s education. According to Forbes, 66% of millennials put aside money for their children’s tertiary studies, compared to 47% of Gen Xers and 35% of baby boomer parents.
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Their children undoubtably notice this diligence when it comes to saving and many parents teach their children the importance of saving from a young age. Klassen therefore suggests opening a bank account for your children.
“Teach them how to save and how to research which instruments are best for saving, helping them set and achieve financial goals.”
They believe in work-life balance
More than any previous generations, millennials believe in the importance of work-life balance and demand more flexibility in their jobs than previous generations.
Millennials know that this balance is more important than only succeeding at their jobs which was something their parents prioritised.
“This attitude teaches their children that money is not everything and that true wealth is measured by more than just the money in your bank account.”
Klassen says that while millennials are getting a lot right, there is always room for improvement, such as helping their children understand financial consequences and realising when it is time to call in a professional.
Teaching children to understand financial consequences
Many millennials practise positive parenting, such as instead of telling their children that they cannot hit a sibling, rather redirecting the child’s energy to something they can do, such as reading a book.
Klassen says while this approach has many merits, it can sometimes inadvertently prevent children from facing the consequences of their mistakes, which is an important lesson when it comes to their finances. The link to the why is sometimes missing, leaving the child to substitute the unpleasant experience rather than having to face it and learn from it.
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“Instead of stopping your children from spending the little money that they saved on a cheap toy that they will either break or soon tire of, let them make the mistake. They will soon learn the reward of saving a little longer for something they really want, which will last longer and give them more pleasure in the long run. In fact, this is true positive parenting: where children are gently shown the consequences of their financial decisions.”
Knowing when to call in a professional
Although millennials are empowered when it comes to their finances, the flip side is that they prefer to do their own research or rely on the advice of friends and family members. They do not always see the value in consulting with a professional.
“By engaging a financial adviser, you teach your children the value of expert advice and that, while it is good to take an interest in your own finances, an experienced professional will give you the unbiased, personalised and expert guidance that will help you make better, more informed decisions.”