Talking about money can be a source of stress within families, particularly if attempts are made to broach the subject unprepared.
Nonetheless, it is more important than ever to tackle the subject of family wealth, particularly when it comes to the issue of passing it on through the generations.
When families turn to the subject of wealth management, though, they sometimes find that they have very different views on how money should be handled. Many of these differences are down to generational views, so understanding how those born at different times think differently about money can help you to have a more rewarding conversation.
Here are some of the key differences that experts have noticed about the way different generations feel about money.
The Silent Generation (aged 75 and above)
The Silent Generation, known as the generation rebuilt Britain after the Second World War, are already transferring their wealth down to their families
Figures from The Resolution Foundation, show that this generation has benefited from increases in property wealth, and have not needed to release this via downsizing.
Passing this wealth down tax efficiently is likely to be important, given the 40 per cent inheritance tax rate, which is where an expert financial adviser can come in.
Baby Boomers (aged 57-75)
While baby boomers, at the end of their working lives or enjoying retirement, have been hard hit by coronavirus-related income falls, they have a cushion of savings and assets built up in the good years.
Boomers hold around a third of the UK’s wealth, but figures from Aegon suggest they aren’t always confident with it, with a study suggesting they are quite cautious.
Generation X (aged 41-56)
The current ‘sandwich generation’, caring for both their children and their older parents, Generation X is rightly concerned about money.
Studies show that Generation X is more worried about their finances than Baby Boomers , while think tank the International Longevity Centre says many are struggling to save all they want for retirement.
The ILC describes this cohort as ‘diverse” with some very prepared for retirement and some far less so. Financial concerns are likely to include the cost of caring, mortgages and supporting children.
Millennials and beyond (aged 40 and below)
Research on Millennials & Money by think tank Common Vision UK found that young people don’t trust financial institutions. They do still rely on their parents, however, as well as peer recommendations when it comes to saving and investment.
Just 19 per cent, 21 per cent and 18 per cent of 18-24s are confident to choose pensions, investments or mortgages respectively by themselves, suggesting that these younger people appreciate advice from older family members on how money should be structured, as well as from trusted advisers.
The Deloitte Millennial Survey, which also covers Gen Y and Z indicates that this generation is “financially prudent and literate” with more than half of millennials and nearly half of Gen Zs saving money and saying they could cope with an unexpected bill.
This generation is also concerned with the business impact on the environment, the Deloitte research found, which leads directly into a preoccupation with green investment and supporting companies that tackle climate change.
Tips for an intergenerational chat
Talking about money across the generations can be tricky. Here are some tips to make it go smoothly:
- Prepare in advance - get all paperwork ready to refer to before you start
- Have a written agenda if you want to make things really formal. That way you will know you have covered all the bases
- Choose neutral territory. If family money conversations are tense, it may be best to keep them out of the family home
- Use an expert. Financial advisers can help ensure conversations are kept on target and can challenge incorrect assumptions in terms of tax and other legalities involved with transferring money