In early November each year, Talk Money Week encourages us to open up and have frank discussions about our finances. This isn’t always easy – money is often a taboo subject, especially among older generations.
But communication is key to our financial wellbeing and mental health. This year, the theme of Talk Money Week was “Do one thing”, asking you to improve your financial wellbeing by talking about just one area of your finances.
What would your “one thing” be?
The “great wealth transfer” makes intergenerational communication more important than ever
The so-called “great wealth transfer” is currently underway, with an estimated £7 trillion expected to pass between generations over the next three decades. That’s a huge amount of money to be changing hands and communication will be key.
Virgin Money recently reported that 44% of UK adults feel uncomfortable talking to friends about money. The situation might be improving though, with 38% of responders saying that they’re better at opening up now than they were five years ago – when Talk Money Week was first launched.
Taboos around money talk can be seen as generational. Royal London reports only 43% of over-65s spoke to their parents about money growing up. For 18-24-year-olds, this figure jumps to 75%.
If you’re struggling to instigate the frank and honest conversations you need to have, it might be worth taking a closer look at how your grandchildren approach the subject.
Gen Z is leading the way in destigmatising money talk and even adopting its own financial language
Generation Z (Gen Z) – made up of those people lucky enough to be born between 1997 and 2012 – are opening up about money to their family and friends, and often via social media too.
They’re adopting their own language to describe some principles that you’ll already be familiar with. For example:
- “Doom spending”, which roughly equates to what you might know as “retail therapy”
- “Soft saving” is favouring spending money now over saving for the future
- “Cash stuffing” means physically putting money aside for different outgoings, usually in cash.
Each of these approaches has its drawbacks (from spent budgets to the opportunity cost of missed interest) but another concept that might be useful is known among Gen Z as “loud budgeting”.
This involves being honest about your financial situation and – up to a point – sharing your finances with your friends. If someone from Gen Z can’t afford something (a group holiday, say, or a night out), they will tell their friends that. It’s an honesty that you might be able to adopt too.
But there are still money lessons you can teach your grandchildren too
Doom spending, soft saving, and cash stuffing can all be damaging. And yet the videos advocating these approaches on social media platforms like TikTok are unregulated and videos rarely include the necessary warnings.
A recent report, published in Professional Adviser, found that more than 70% of financial advice consumed by young adults is misleading. TikTok was named the worst offender. A massive 91% of TikTok videos lacked necessary disclaimers, despite the videos:
- Encouraging stock purchases
- Implying guaranteed returns
- Specifying how much to invest.
The rise of financial influencers (so-called “finfluencers”) could be hugely damaging to your grandchildren’s long-term financial security. In fact, the FCA has recently announced a crackdown on illegal influencers, issuing alerts against 38 social media accounts.
You might use Talk Money Week to discuss the importance of long-term financial planning and advice from regulated professionals. This is especially important in the context of the great wealth transfer and will help give you peace of mind that your money will be in safe hands.
Younger loved ones might also benefit from the financial lessons you’ve accrued over your life and career. These might include the value of money, the difference between saving and investing, how to pay your future self first and debt management.
Talking openly about your estate planning and inheritance is the best way to avoid disputes
If you’re going to use the lessons of Talk Money Week to discuss just “one thing”, you might opt to broach your inheritance. You can read more about the importance of a will, and how it fits into your wider estate planning in our latest blog, but communicating your wishes is vital too.
According to the Guardian, as many as 10,000 people are disputing a will every year. The rise has been driven by (among other factors):
- The great wealth transfer raising the stakes for future generations
- Increases in second marriages and blended families leading to children being disinherited
- A rise in dementia leading to more claims of coercion or improperly drawn-up documents.
MoneyAge reported back in 2022 that 57% of parents haven’t spoken to their adult children about their will, but getting your thoughts and feelings out into the open can be really useful.
Sitting down to discuss your plans allows you to explain your reasoning, manage expectation, and make clear that you understand how important your decisions are. With all your loved ones in the same room, you can ensure that everyone’s on the same page and there’s less chance of misinterpretation or future recrimination.
Speaking about the amounts involved might also help your beneficiaries to make plans. Just last month, Canada Life reported that more than a fifth (22%) of UK adults are delaying major life events until they receive an inheritance. This figure jumps to 27% for those aged 18-34.
Knowing your plans could make a real difference to their lives now, helping to plan for life milestones like buying a house or starting a family.
Get in touch
If you’re looking for an independent financial adviser in Milton Keynes or Olney, look no further. At Jane Smith Financial Planning, we’ve been helping clients for 30 years, so contact us at info@janesmithfinancial.com or call 01234 713131 to see what we can do for you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
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