The XX Factor

How Boomers Should Talk to Their Millennial Kids About Money

The money talk, now more important than ever.

In the New York Times yesterday, Your Money columnist Ron Lieber dispensed some advice for parents on how to respond when their kids ask how much money they make. Lieber notes that children and teenagers have a range of motivations for peeking at their parents’ paychecks—from pure curiosity to fear for the family’s financial security—but that some kids are fishing for information on how to measure up to mom and dad’s standard of living when they leave the nest. Some “curious children may be trying to figure out what they would need to earn to have a life as an adult like the one they have as a teenager,” Lieber writes. “In that case, you could talk about salaries for jobs like the ones they’re interested in, deflecting the conversation away from the jobs you have.”

It’s good advice to encourage kids to cultivate their personal goals and expectations outside of their parent’s particular set of circumstances—and that’s especially true for millennials, who are unlikely to follow in their parents’ financial footsteps. When Annie Lowrey reported on the generational income gap last spring, she found that “Generations X and Y, meaning people up to about age 40, have amassed less wealth than their parents had when they were young. The average net worth of someone 29 to 37 has fallen 21 percent since 1983; the average net worth of someone 56 to 64 has more than doubled.” Writes Lowrey: “For the first time in modern memory, a whole generation might not prove wealthier than the one that preceded it.”

Lieber notes that the money talk is, to some extent, a rich kid problem. “Any discussion of tactics in answering this question is in part an affluent person’s conceit. In families that don’t have enough money to provide everything kids need, income and expenses are an everyday reality that is part of the air kids breathe. There, children will usually know sooner rather than later what the constraints are, what it takes to live within them and how older children might help make things easier.” But some millennial children face a different challenge—they grow up in comfort, then graduate to a tightened economic reality they never experienced in their parents’ homes. As generational theorist Neil Howe told Lowrey, millennials “look at the house their parents live in and say, ‘I could work for 100 years and I couldn’t afford this place’ … Millennials have a very conventional notion of the American dream—a spouse, a house, a kid—but it is not going to be easy for them to get those things.”

That generational divide presents a problem for parents who hope to teach their kids how to manage money, but are nevertheless modeling an economic reality their kids may never experience themselves. (Of course, many boomers’ realities have changed with the recession, too, but making a lot of money and losing some of it is a different challenge from not accumulating wealth at all.) Baby boomers were born into a flourishing post-war middle class, but our recession compromised that class, and it shows few signs of recovery: “Since the worst days of the recession ended, inequality has continued to grow,” Lowrey writes. “Corporations that shed workers became leaner and more profitable. Members of the 1 percent have taken nearly all the wage gains made in the recovery.” Millennials have proven committed to organizing politically with one another over wealth disparities in America, but we still lack guidance on how to manage the money we (don’t) have.

Perhaps baby boomers can help bridge the generation gap by calling in outside help: Lowrey compares the millennial condition to the one faced by college graduates in the early ‘80s, who left school in the midst of a recession, faced heightened unemployment and lower wages, then “never really caught up.” While some parents of teens struggled  through that era, boomer parents might be wise to recruit a relative or neighbor who made their way through tougher times to help provide a more realistic model for millennial kids than their own parents’ paychecks ever will.