If you can’t talk politics this Thanksgiving, talk money. Fidelity recently found that 56% of parents never talk to their children about money. An open conversation about wealth, and plans for building or spending that wealth can go a long way. Explain to your children how important it is to work with a fiduciary who will help them build a plan for their own retirement. Fidelity explains in its recent study, titled The State of Wealth Mobility, writing:
BOSTON, November 19, 2024 – According to the Fidelity Investments® State of Wealth Mobility study, which examines how Americans are faring on building their wealth, respondents across income and asset levels agree people need to improve their comfort level about discussing family finances. More than half (56%) say their parents never discussed money with them, yet the majority (81%) would have benefited from financial education at an earlier age. Encouragingly, most Americans today are changing course, with 4-out-of-5 saying it’s important to talk to the young people in their lives about the subject—and two-thirds are actively engaging in those conversations.
“Financial planning is often a deeply personal experience, so it’s no surprise people have historically been uncomfortable talking about it,” said Rich Compson, head of Wealth Solutions at Fidelity Investments. “However, it’s important to start talking about family finances early to ensure the next generation is prepared, especially as life becomes more complicated. All too often, we see families hold off on engaging in these critical discussions until a crisis occurs, resulting in increasingly difficult conversations and decisions.”
One reason many people may consider money to be a taboo subject is because most accumulate wealth on their own. The study finds 8-in-10 Americans identify as having “self-made” wealth, with only 5% identifying as inheriting it. This could help explain why many people, especially older Americans, may often be reluctant to engage their family in financial planning. In fact, one third of Baby Boomers don’t even see the need for a financial plan—the most of any generation.
Generally, most Americans (89%) say they do not consider themselves wealthy—a feeling that extends across all income and asset levels—which could also play a role in why people haven’t felt the need to discuss money as a family. However, three quarters (70%) of respondents are hopeful the next generation will attain a higher level of wealth than what they have today—perhaps as a result of increasing their discussions about money. Furthermore, for most Americans, the definition of what it means to be wealthy is relatively modest. For many, a major criterion for feeling wealthy is simply the ability to not have to live paycheck to paycheck.
Action Line: Even children and grandchildren need to think about money. For those with recently graduated children or grandchildren who are working their first jobs out of college, be sure to download my free Special Report: How To Invest After Graduating College.
