Someone was finally brave enough to ask the question on Thursday, Oct. 27, 2017.
That's when the Huffington Post published a story that might as well have been a gut punch to parents whose kids are between the ages of 20 and 34.
The headline was simple: "Why Is No One Teaching Millennials About Finances?"
It's a great question, one that parents of millennials need to address. Because if they don't, there's a good chance they'll wind up:
A) Financially supporting their children for long periods of time.
B) Watching their kids struggle financially for long periods of time.
C) Having their hard-earned wealth squandered by their heirs.
None of these options is particularly appealing, right? But all three are likely if parents of millennials don't start teaching their children money management skills.
Consider the following:
- Millennials are on track to be the best-educated generation ever, according to research conducted by the Pew Research Center.
- Sadly, only 7 percent of millennials have ever studied personal finances, according to a report published by Bank of America.
- Only about a quarter of all millennials have basic personal finance skills, according to a study conducted by George Washington University.
Combine this information with the fact that 70 percent of families squander their wealth by the time it reaches the second generation and you're faced with the reality that there is only one thing to do: Teach your millennial children how to manage their money and your wealth.
Here is a look at three things parents must teach their millennial children about money:
1. Begin with the Basics
Budgeting 101 is the best place to start with your millennial children. Many are facing uncertain financial futures, thanks in large part to student loan debt, a soft job market and their willingness to make ends meet through "gigs" instead of career-building jobs (at least for now).
If you introduce your millennial children to budgeting, help map out their monthly expenses and get them to start saving something, that's a positive step in the right direction.
2. Introduce Alternative Investments
Even though many millennials don't understand finance, they appreciate retirement planning.
According to a survey conducted by Capital Group, more than 90 percent of millennials are using 401(k)s or IRAs to save for retirement.
That's incredibly encouraging – and it's an opportunity to build on their interest in long-term investing. Parents who understand the value of alternative investments.
Introducing millennials to alternative investments (whole life insurance, real estate, private loans) early can be a great way to help your children follow in your financial footsteps and build life-long wealth.
3. Start Planning to Sustain Your Family's Wealth
It's easy for anyone who has worked hard to build wealth to simply hand an inheritance to their heirs. After all, that's they way it's been done for decades.
But it doesn't work: Family wealth is gone by the time it gets to the second generation.
Heritage design is a better way.
It's the act of passing along your wealth and your values. It involves a series of decisions and actions that have nothing to do with money (at least on the surface).
It's about sustaining your family's wealth by teaching your children to communicate, work together, play together and appreciate each other regardless of wealth – then passing along your wealth.
Today, Tomorrow, and the Future
The long-term financial success of your children – today, tomorrow, and in the future –depends on your ability to educate them.
Contact The McGriff Alliance to discuss how you can start building a brighter tomorrow for your children – and then address the future of your wealth.