One of the primary financial goals for most parents is to provide their children with a better life than their parents had.
As goals go, it’s a nice aim. It is not always achieved.
Spectrem’s new study on how parenting impacts investor perceptions reveals that not everybody manages to leave their offspring with a better financial life. Parenting and Financial Issues shows that many people do not believe their children will end up with an improved financial situation. When those investors are very wealthy, a worse financial situation may not be all that bad.
Investors who have children who have grown up and moved out of the house were asked to respond to the prompt “My children’s financial situation will be …“ and 41 percent said their children’s financial life would be better than their own. That’s less than half of investors who have raised children who managed to create a financial situation for their children which was an improvement over their own financial situation.
The result was almost the same for investors who still have children living at home. Forty-three percent of those investors said their children will have a better financial situation.
Where those two segments disagree is on those children whose financial situations are NOT better than their parents. While only 19 percent of those investors with dependent children can foresee their children having a worse financial situation than their parents, 30 percent of those with non-dependent children predict that situation, whether it is the current situation their grown children are living through or at some time in the future.
Oddly, the wealthier the investor, the more likely they are to believe their children will have a worse financial situation than their own. Only 19 percent of investors with a net worth between $500,000 and $1 million believe their children will be worse off than they are, but 36 percent of those investors with a net worth between $15 million and $25 million believe that. The percentage follows a path from lesser wealth to greater wealth, indicating that many wealthy investors somehow fail to create a situation of financial growth for their children.
While Baby Boomers probably know what kind of financial situation their grown children have, Gen X investors likely have children still in the home or just out, and those children may not have a set financial situation. While 46 percent of Gen X investors believe their children will have a better financial situation, 17 percent believe their offspring’s financial situation will be worse. Millennials, on the other hand, are more positive, with only 6 percent anticipating a situation where tehri children will be in a lesser financial situation than their own.
©2019 Spectrem Group
Keywords: investors, advisors, parents, children, Spectrem, wealth, millennials, gen x