As many millennials become parents, they seek to raise their children with something they never had: financial security.
Those kids are part of Gen Alpha, the post-Gen Z generation that a new report on Morning Consult defined as children nine years of age or younger. The majority of the 2,000 Gen Alpha parents surveyed (70%) are millennials.
Morning Consult used cluster analysis to identify three core groups of Gen Alpha parents “based on what they say are the most important factors in thinking about raising their children,” the report says. The Idealists are the wealthiest group, and The Pragmatists are the oldest, with the most Gen X parents. But the Financially Fraught cohort is the largest (47%) and the youngest, with the most millennial parents, which the report says is indicative of how Gen Alpha parents are bucking the general trend as more millennials transition into parenthood.
Concern over the financial success of their children is a sign that the effects of Great Recession has remained for millennia (the oldest turn 42 this year) more than a decade ago. Much has been written about economic conditions of the millennium: Many of the oldest of the generation graduated to the 2008 financial crisisstruggling to land their feet in a rocky job market while shouldering huge student debt and faced with the rising cost of living. When they finally began to gain financial ground, they were hit by a pandemic and another, albeit smaller, recession. While the economy is coming back, it’s pretty hot, and millennials are facing off real inflation for the first time in their adult lives.
Millennials have a steeper hill to climb to afford the same lifestyle their boomer parents enjoyed: While their wealth has doubled since the start of the pandemic, they still hold 7% of the nation’s wealth, compared to the 22% boomers held in they are almost the same age, Data shown by the Fed. So, it’s no wonder millennials are so concerned about setting their kids up for financial success—many are already seeking financial advice on how to do just that, Morning Consult found.
“The Great Recession left many millennials disillusioned with the idea of reaching or surpassing their parents’ level of financial success, and they still struggle to feel confident about their finances,” Charlotte Principato, financial services analyst at Morning Consult, said. luck. “They are facing an unexpected uphill battle at the beginning of their careers, and they want their children to be better prepared for economic uncertainty than ever before. To do that, they take steps to lay a solid foundation in savings and financial education. “
Gen Alpha is on its way to riches
Most Gen Alpha parents have already opened, or plan to open, savings accounts for their little Alphas, Morning Consult found, with a general savings account and a college savings account at the top in the list. Many of those who checked it off their list did so before their child turned four, while those who had plans to do so usually waited until their child was 10 or older. Some Alpha parents (less than 10% each) have already opened CD accounts, money market accounts, and IRAs or Roth IRAs for their children. More than 20% of each plan to open one in the future.
Struggling with the burden of student debt for their own education, Gen Alpha parents are also more willing to help cover the costs of their children’s higher education than all parents of the same age. 18 or younger (Morning Consult surveyed 1,000 people in this group. for comparison): 39% vs. 35%.
And they’re open about it all, already talking about financial topics with their kids—not surprising for a generation that not afraid to talk about money. More than half of parents have already chatted with their child about spending, saving, and budgeting, and different types of money such as cash and credit. Many do so before their child turns four, but these discussions are more likely to be older than the child.
“Parents encourage their children to become financially independent, more easily,” said the report.
But despite all their economic worries, a majority (77%) of Gen Alpha parents are very or somewhat confident in their child’s future financial security—though that confidence wanes the less wealthy they become.
“While Gen Alpha parents may be more concerned about their own finances, the same cannot be said about their children,” the report reads. “These parents are doing their best to future proof their children’s wallets, and this planning and preparation translates into more confidence in their children’s financial future.”
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