Don’t leave tricky money conversations hanging in the air this New Year
The Family Financial Tree report from Standard Life looked at the family money tree over four generations and makes some surprising findings. It reveals how families collectively manage and have talked about their personal finances.
The findings, based on survey data of over 4,000 adults in Great Britain, draw compelling conclusions about what is effectively one of the last taboo subjects for families – the uncomfortable discussions around money, inheritance and retirement.
How money flowed across four generations
The research tracked how money flowed across four generations of a family and also established how this flow of cash is reliant on families having some tricky conversations. The report also finds that many of us remain typically British and private about our finances. While we might involve our spouse or partner in discussions and future planning, few people say they communicate freely with others in their family about their finances.
Family financial plans involve all the generations
More than a third of parents (35%) and two fifths (43%) of grandparents would not ask anyone within their family for advice about finances. And despite evidence that a large volume of money is moving freely between generations, only one in four (25%) people say that their family financial plans involve all the generations. However, the attitude of new parents is very different. Almost four in five parents (79%) with children under the age of five would ask the family for money (79%) and three quarters (75%) would ask the family for financial advice.
Three distinct types of families
The research has identified three distinct types of families: ‘talkers’ and ‘gifters’, who are likely to benefit from discussing the family money tree, and ‘avoiders’, who are failing to release the power of the family financial tree.
Which type of family are you?
‘Talker families’ are the 25% of the population who involve all of the generations when planning family finances – they are likely to be open with each other, discussing salaries, upcoming bills and even inheritance.
‘Gifter families’ are families who gift money between the generations to help with both big and small purchases, whether it be a mum paying for Gran’s supermarket shopping or a granddad contributing to his granddaughter’s education. ‘Gifters’ are also likely to be ‘talkers’.
‘Avoider families’ however are the least likely to benefit from the family financial tree, as they avoid money chat in their household, particularly the more difficult conversations. This means they could be missing out on the combined strength of planning for the future together and could be making decisions based on little information about future commitments or needs.
The research is based on survey data. 4,071 UK adults were surveyed by YouGov on behalf of Standard Life between 4th and 7th October 2013, weighted to nationally representative criteria. Of the base sample, 1,633 (unweighted) parents, who were not also grandparents, were asked a series of specific questions based on their status. In addition, of the base sample, 885 (unweighted) grandparents were asked a series of specific questions based on their status. The survey was conducted online.