Research of the Week: Will Your Children Be Better Off?
Only 1 in 8 parents believe their children will find upward financial mobility.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
It’s the dream and goal of most parents that they will set their children up for life in a way that means their kids will do better than them once they become adults. For the most part in the past, this was almost a given for most Americans. However, in recent years this part of the American dream has started to come into question.
This week’s study – the 2015 Next Generation Reality Report – from Haven Life expands on how parents feel about their children’s chances for financial success in the future.
The big result
Over 50 percent of parents believe their children will have less disposable income as adults than what they, themselves, have today. That effectively means that regardless of race, ethnicity or even social class, parents see a tough road ahead for their children to succeed.
The fascinating details
- While over 50% feel their children will have less disposable income, another 20% believe it will be about the same
o Only 1 in 8 Americans believe disposable income will be more readily available
- Less than 20% of parents believe their children will achieve a better quality of life
o One in three believe quality of life will be about the same
o The rest think quality of life is likely to be worse.
On a high note, the study also asked about health – which most parents believe will be better for their children. Over 60% of parents believe their children will be more health-conscious. That could be a big advantage, considering the rising cost of healthcare and the financial burden the average family feels when faced with unexpected medical bills. Preventative care measures could help future families avoid the added burden of medical debt.
What you can do
The more you can do to prepare your children for their financial future, the more likely they are to be successful and avoid financial problems once they get out on their own. There are two parts to doing that successfully:
- Making sure you teach your children the right financial lessons before they get out on their own.
- Planning ahead to provide whatever support or assistance you can afford to give your children a leg up.
The first part doesn’t require any capital to get started. You can start with basic budgeting lessons and then move up to topics like credit when they reach the right age. Getting your kids involved in things like holiday budget planning can also help them avoid things like a sense of entitlement and a tendency to overspend or splurge.
For the second part you’ll need some savings yourself. For example, you can invest in your children’s education with a 529 or Coverdell College Savings Plan to help them avoid the incredible burden of student loan debt right as they’re starting out. Parents are also taking a more active role in supporting adult children, although this can often lead to debt problems for parents as they near retirement. With that in mind, allocating savings for supporting your kids or even putting that money aside for them in a trust can go a long way towards helping them achieve financial success without endangering your own financial stability.