Money / financial planning
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Not every “money rule of thumb” that you may have grown up on is still relevant to your Gen Z children. After all, this generation is growing up in a very different world than you – they grew up during a pandemic, they are tech savvy, and the economy has changed.
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While you may mean well, don’t give this outdated money advice to your Gen Z kids.
Buying is always better than renting
For older generations, buying a home is considered a rite of passage – but this may not always be the best option for your children.
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“While buying is often a wise financial decision, it depends on your situation,” said Liz Frazier, CFP, executive director of financial literacy, Copper Banking. “If your only planning to be in the area for a few years or if you don’t want the hassle of owning it, renting it might be a better decision.”
More education is always better
As a parent, you want your children to succeed, but an advanced degree may not always be the best path for your children to succeed in their careers.
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“Again, this may be true in some cases, but education is an important purchase and should be valued like any other investment,” said Frazier. “Parents and children should discuss the costs and rewards of their education.”
It is rude to discuss money with others
You may think of money as a taboo subject, but it shouldn’t be.
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“This outdated wisdom is probably the most damaging of them all,” said Frazier. “We created a generation of people who are intimidated and uncomfortable with finances because they haven’t faced them. We should talk about money with our children along with all other important conversations like diet, safety, and kindness. Money touches every part of our lives, from graduation to retirement – our children’s understanding of money will have a direct impact on their success at every stage. “
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When in doubt, Google It
If your children come to you with a financial question that you don’t have an answer to, advise them to do their research online. But there are some less reliable sources out there, so be careful when giving this advice.
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“While the internet, search engines, and online forums are great tools, they aren’t the best resources when it comes to personal finance – the main reason for personal finance is just that, personal, and it will be different for each household,” said Maureen Wright, CFP, Financial Advisor at Savant Wealth Management. “[It’s better to have] a thoughtful conversation with a financial expert who understands your financial situation and can make appropriate recommendations and set guidelines. “
It’s okay to be in debt
“Assuming the majority of parents of Gen Z children are between Millennials and Generation X, the financial mark of those generations is their use of debt,” Wright said. “Within these generations, we are seeing increases in student and consumer debt. If there is one lesson that should not be passed on to their children, it is so laissez-faire about debt. “
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Wright notes that it has become “normal” to have six-figure student loans, but it shouldn’t be.
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“This level of comfort with debt and its acceptance as part of life creates a ripple effect that affects other areas of life,” she said. “It can lead to abuse of credit card debt, car loans, and even mortgages. It should be taught early on that consumer debt is not part of life. If you can’t afford something, then you should move on or find a way to get it up and running according to your financial circumstances through additional savings or delayed gratification. “
Keep your long-term savings in the bank
Money that you don’t need to put in a savings account right away is generally viewed as good advice, but Kelly Crane, CFP, president and chief investment officer at Napa Valley Wealth Management, says it is now out of date.
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“Interest rates are at an all-time low and inflation is rampant,” he said. “Long-term goals should be funded with investments designed to keep up with inflation. Using stocks, mutual funds, and other investment vehicles designed for long-term investing will help your money grow at a pace that keeps pace with or outperforms inflation, giving you a positive real return and helping you build your long-term To achieve goals. “
However, a savings account is still a convenient place to hold funds for more short-term needs.
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“Short-term reserves and emergency funds should always remain liquid and kept in a safe place like the bank, where they can be accessed anytime without market risk,” said Crane.
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About the author
Gabrielle joined GOBankingRates in 2017 and brings a decade of experience in the journalism industry. Before joining the team, she was a writer and reporter for People Magazine and People.com. Your work is also at E! Online, Us Weekly, Patch, Sweety High, and Discover Los Angeles, and she was featured as a celebrity news expert on Good Morning America.