Lynn MacNeilManaging Your Money

According to the stories I hear from some parents, their wallets are thin, and their tastes are expensive. They make up about a third of the population. They’re often referred to as the social media generation. About two-thirds of them still live at home with their parents. Who are they? They’re the millennials and Gen-Z– ranging in age from 10 to 40 years old. They are mostly the children of Baby Boomers and Gen-Xers.  According to Forbes, they may be the first modern generations to have a future lifestyle less affluent than their parents.

“I see many parents who may be supporting their adult children to live financially, but not supporting their adult children to grow financially.”

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As my career evolved, I went from assessing a person’s individual financial situation, where the focus was mainly on them, to a much broader and holistic perspective – because wealth management is not only about you.  It’s also about whom you love and want to support and protect. One of the main questions I ask is “who is important to you?”. Frequent responses are parents and siblings, but they almost always include children, regardless of their ages. Through our discussions, I see many parents who may be supporting their adult children to live financially, but not supporting their adult children to grow financially.

I read an article recently from Entrepreneur Magazine with the headline: Nearly Half of Young Adults Live with Their Parents to Save Money – But They’re Spending Big on Luxury Goods. The article goes on to say that almost half of young adults between 18 – 29 reside at home with their parents to save money. This is not surprising amidst high inflation and soaring real estate and housing costs. It begs the question: “Is this a good strategy or a bad one?” That depends. For those who are using the opportunity to plan for their future, this is a great strategy. I also understand that in many cultures, living at home with your parents until certain life milestones is a cultural norm that is beneficial for families. However, many of these young adults are using their cost “savings” to fuel high-end retail sales and extravagant lifestyles. According to a property management survey, only about 40% of those living at home are actually paying rent, and those rents are extremely low relative to the real world.

This increase in disposable income among young people, combined with the powerful influence of social media, has meant good news for the luxury industry.  It’s an unfortunate reality that social media bombards younger generations with pressure to ‘keep up with the Joneses’ – and leaves them living beyond their means to keep up with their peers. The message society should be sending them is ‘don’t go broke to look rich’. Between high-end restaurants, dream vacations, and luxury brand names, many young people are living a lifestyle that they will not likely be able to maintain once they enter the “real life” of mortgage or rent payments, food costs, electricity, etc.

“The message society should be sending young people is ‘don’t go broke to look rich’.”

I was recently listening to a friend’s story about her nearly 30-year-old daughter, who works full-time, lives at home but pays no rent, and is a wholehearted social media user. The mom was talking about how that past weekend, her daughter went shopping downtown, coming home with a designer bag.  Her daughter had dinner with friends that Saturday evening, at one of the city’s most expensive restaurants, with top-of-the-line food and bottle service. It was not a special occasion; it was the norm. The whole thing was documented on Instagram for all her followers (and her mom) to see. The restaurant bill was nearly $400 each!  My friend was expressing frustration because she and her husband are far more frugal and don’t live like that, and don’t think their daughter should either.

I’m certainly not assuming that all young adults are blowing their cash on opulent living that they can’t afford.  I’m often impressed with the children of my Baby Boomer clients who are uber-responsible with their hard-earned money and live a frugal lifestyle, well within their means. For those parents where that is not the case, it may be an opportunity to help support their young adult’s financial growth and maturity with “real life” strategies. In a recent discussion with a client looking for advice on this topic, these were my thoughts. If they are no longer in school, a job is a must. Charge them rent for room and board – if you can afford to save this money for them, put it aside for a down payment on their future home. Try to make the rent amount somewhat reasonable, not just a nominal amount. The point is for them to “feel” the real world, all within the safety of your structure.  And remember, if you make it too comfortable for them, they may never leave – or at the very least become independent adults!

“It’s an unfortunate reality that social media bombards younger generations with pressure to ‘keep up with the Joneses’.”

Another way to support their financial growth and maturity is by educating them about financial planning – saving, debt management, investing, managing lifestyle expenses, etc. McGill University offers a free online course for beginners that covers the basics. It could be a good place to start for a young adult or anyone who wants to learn more about the basics of money management. To learn more, head over to our Facebook page! Also, talk about finances with them – not necessarily revealing all your financial details, but discuss your financial decisions and strategies – like moving money from a chequing account to a high-interest savings account or paying off a higher-interest debt, whatever it may be.  Young adults are exactly that – young “adults”. Adulting is not always easy, but the sooner they learn the skills needed to adapt to the responsibilities of life, the better they will manage.

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Lynn MacNeil, F.PL., CIM®, is an Associate Portfolio Manager and Financial Planner with Richardson Wealth Limited in Montreal, with over 27 years of experience working with retirees and pre-retirees. For a second opinion, private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5796 or [email protected]. Or visit our website at

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. Richardson Wealth Limited is a member of Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons, Limited used under license.

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