Insightful money lessons you can learn from different generations – and why an intergenerational wealth planner is crucial
Learning to manage wealth is a lifelong journey, and each generation approaches it with a unique perspective. These perspectives come from what society looks like at the time and could either mirror or contradict what a specific generation has seen in their parents, peers, and the world at large.
While many often accept the financial wisdom passed down through the years, there’s plenty to be learned from all generations, including the younger millennials and Gen Zs. This article will explore the money lessons you can learn from different generations, as well as how collaborating with an intergenerational wealth planner could ensure stability and financial security for the whole family.
Different generations carry varying money mindsets
Each generation navigates the financial landscape with a unique set of experiences and priorities, brought on by society, economic struggles, and worldwide conflicts.
From the post-war “silent generation” to the tech-savvy investing of Gen Z, understanding these nuances could be the key to effective and creative financial planning. Here are the different money mindsets that shape each generation’s financial journey.
1928 – 1945: The silent generation, appreciating stability and frugality
The silent generation grew up during the Great Depression and second world war, and through these challenges they fostered a strong emphasis on frugality, self-reliance, and delayed gratification. They witnessed the importance of saving and living within their means first hand.
Many in this generation will have likely developed strong principles of patience and understand that building a nest egg for generational wealth and retirement takes time.
Lessons to learn from the silent generation
- Live frugally. Prioritising needs over wants can help you to avoid impulsive spending.
- Save consistently. Developing a habit of regular saving can enable you to build wealth over time.
- Pay off debt. Eliminating debt where possible may provide peace of mind.
1946 – 1964: Baby boomers, more prepared to invest but can be risk-averse
Often defined by resilience and a focus on building a secure future, baby boomers witnessed significant changes across the world, from the building of the first nuclear power plant, to the moon landing in 1969. Though they were the children of families who lived through the Great Depression, they had access to more affordable housing and a wider range of higher education opportunities.
Indeed, a study from the Centre for Longitudinal Studies noted that retirement was the most common reason for leaving the workforce early, with a third fewer baby boomers in the labour market at age 62 compared to 55. Private pensions and housing assets played a key role in these early retirements.
Lessons to learn from the baby boomer generation
- Invest for the long term. Embracing compound returns early can help grow larger investments.
- Plan for retirement. Setting financial goals for retirement and actively planning can help set up a secure future.
- Being risk-conscious might come in handy. Understanding your risk tolerance could help you make investment decisions and foster stability.
1965 – 1980: Generation X, self-reliant and open to change
Generation X are sometimes referred to as “the forgotten generation,” and BambooHR corroborates this by highlighting that “X” is a symbol used to represent an unknown variable. Though Gen X makes up the smallest generation by population worldwide, they are defined by their self-reliance, collaborative nature, and their general comfort with technology.
They were the first generation to experience widespread dual-income homes and single-parent households. They also saw the end of the Cold War and the fall of the Berlin Wall, among many other major political events.
Lessons to learn from Gen X
- Embrace adaptability. Being prepared for economic changes can make it easier to adjust your financial strategy.
- Prioritise debt repayment. Managing debt strategically can help minimise interest charges and help you gain financial freedom.
- Develop strong negotiation skills. Negotiating salaries and benefits can help expand your financial resources.
1981 – 1996: Millennials, hard-working and driven towards success
Millennials are typically considered as being less well off than their baby boomer and Gen X parents, but Cambridge University reports that this may not be uniformly true. They are, however, grappling with an increasing wealth gap, largely due to an uneven spread of financial rewards and career paths.
Millennials also experienced a series of major shifts to world stability, including the 9/11 attacks, the wars in Iraq and Afghanistan, and the Great Recession of 2007 – 2009.
While these events may have made it more challenging for millennials to achieve the same milestones as earlier generations, they are considered the first digital generation and swiftly adapted to new technologies.
Lessons to learn from millennials
- Challenge the status quo. Being informed about financial products and seeking out personalised financial advice can make it easier to find unique solutions to unique problems.
- Prioritise financial literacy. Educating yourself on managing wealth can help build financial skills and security.
- Embrace financial technology. Using budgeting apps and online resources can make it easier to manage your finances effectively.
1997 – 2012: Generation Z, flexible, honest, and collaborative
Generation Z, known as “Gen Z”, is the first generation that grew up with the internet from day one, and tend to value diversity and exploring their own unique identities.
According to a study conducted by Stanford University, Gen Z individuals living in the US and Britain experience a world that operates at this increased speed, scale, and scope as the norm. Because of this, they have developed a unique blend of self-reliance and collaboration, and aren’t afraid to embrace unique opportunities.
In fact, their openness and willingness to engage in frank conversations has allowed concepts such as “loud budgeting” to thrive. Standard Life explains loud budgeting as being open about what you do or don’t spend money on. It can help people set boundaries with friends and family about financial constraints and expectations.
Lessons to learn from Gen Z
- Embrace the concept of loud budgeting. By talking openly about money with friends and family, you can share experiences and grow your knowledge.
- Start investing early. Putting away even small amounts early in life (or doing so on behalf of your children) can help build on the power of compound interest.
- Challenge traditional financial norms. Exploring alternative investment options could help create a robust and diverse portfolio.
The power of intergenerational wealth planning lies in embracing different ideals
In today’s financial landscape, a unified approach could be the key to not only building a solid foundation, but a secure and long-lasting financial legacy.
By including your whole family in the conversation, I could help you create a holistic strategy that aligns with everyone’s needs and aspirations. In the same vein, talking openly about money can help foster trust and transparency, ensuring everyone is on the same page regarding financial decisions.
It’s important to remember that planning ahead can also help minimise confusion and potential disputes when it comes to inheriting assets.
Just as family history is passed down through stories and traditions, financial habits and beliefs are often inherited across generations. By understanding how different age groups approach money, you could identify valuable lessons, avoid common pitfalls, and build a more secure financial future for yourself and your family.
Get in touch
I understand the importance of intergenerational wealth planning, helping families bridge the financial gap and achieve long-term security.
Email Marnel.Stafford@fosterdenovo.com or call 07305 970959 or 0207 469 2800 to find out more about how I can help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.
Pension savings are at risk of being eroded by inflation.
The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.
The Financial Conduct Authority does not regulate taxation and trust advice.