Money may be ageless, but how it’s viewed, invested and spent can depend on when we were born. Attitudes toward money develop early and are influenced by our parents. They can also be shaped by the social and political events that affect “our” generation as we enter adulthood.
This combination can also affect how we plan our financial futures, the amount of risk we are willing to take and, ultimately, the types of investments that enable us to sleep well at night. If left unchallenged, some of these tendencies may also keep us from realizing our financial goals.
Looking Through Different Lenses
At a very high level, it helps to consider how financial experiences may have varied across the last several generations—generations to which many of our family members belong.
The Silent Generation
For many in this age group, their earliest memories involved economic hardship due to the Great Depression, followed by rationing during World War II. Their early adulthoods then coincided with more “war” years— Korean and Vietnam. It’s little wonder that these experiences seemed to find expression in a tendency to be conservative and save both cash and provisions for the next threat. Many ended up being able to retire early, supported by company pensions, Social Security benefits and interest on their savings, though perhaps they didn’t take the risks or have as many experiences as they would have liked.
Baby Boomers grew up under very different circumstances. Their childhoods coincided with a post-war boom, while their adulthood coincided with a time of high inflation. It conditioned many to buy what they wanted “now” since they might not be able to afford it later, which may have led to the material-driven lifestyle choices associated with this generation. As they head into their retirement years, some Baby Boomers may still focus more on enjoying what they have while they can. As a group, they tend to tolerate more risk and be more trusting of the stock market and of things working out. For many, retirement can be more about what they will do next than actually a time for slowing down.
As teens and young adults, Gen Xers witnessed—and many have been victims of—multiple manias and crashes at key times in their financial lives. These include the 1987 market crash and subsequent recession as well as the bull market of the 1990s, followed by the dotcom debacle, not to mention the many Wall Street scandals. Then, they experienced the 2008 recession and housing crisis! Because of the timing, many in this generation have had a harder time accumulating wealth than those in the Baby Boomer and Silent generations. Overall, Gen Xers are often characterized as distrustful when it comes to wealth and investing. Some may even need to be convinced the future is something you really can successfully plan for.
Millennials were children or just entering adulthood at the time of the September 11 attacks. They may have seen their parents and their friends’ parents struggle with unemployment and housing issues during the recession and housing crisis of the late-2000s. As young adults, many continue to deal with student loans. In general, they have been slower to reach traditional milestones—from marriage and starting families to buying a home. However, they are moving forward and seem focused on planning ahead and perhaps having a side gig, just in case.
Gen Z, today’s children and emerging adults, has never known an app-less life. Even more than Millennials, they trust technology and “off-the-grid” solutions, including cryptocurrencies, virtual payments and crowdsourced funding. They are also said to be savers and leery of debt, determined not to repeat the “mistakes” of generations before them.
Customized to You
When you look across generations from this very high level, what becomes clear is that aspirations, needs, comfort levels and attitudes toward risk can vary widely. While intentions may be good and accepted actions logical in the context of the times, each group can benefit from taking a broader perspective when planning ahead. Creating that broader perspective is what advisors do especially where multigenerational family wealth is involved.
While members of each generation may seek different things from their money, we know they all want the same thing from their advisors—sound advice customized to their unique circumstances, attitudes, aspirations and needs. That advice often needs adjusting for personal preferences and to create a shared appreciation of how different members’ perspectives factor into a family’s plan for the future.
For more information on our approach to delivering goal-driven wealth management services across all generations, visit us here or call 630-906-2000.