Independent Thinking^®

Thoughtful Giving – and Receiving

Millennials are arguably better equipped to inherit or receive financial assistance from their parents or grandparents than preceding generations.

Their formative experiences, from the dot.com crash to the Great Recession, have made them relatively risk averse, for better and for worse.
 
Born between the early 1980s and the early 2000s, Millennials, also known as Generation Y or the Net Generation, have struggled to gain employment. Many were forced to return to their parents’ homes after college and take low-paying jobs. The improving economy of the past seven years has obviously helped, but many economists believe that this generation has lost time and money that it may not recover.
 
The result is a generally conservative view of money that is attractive in some ways – Millennials as a group expect to work hard and may be less likely to squander an inheritance than their parents were at the same age – but it also carries its own risks. Getting stuck in a dead-end job, putting off homeownership, and avoiding the markets have financial opportunity costs. And the long-term emotional costs of delaying travel, marriage and children are more significant still.
 
Understandably, many parents and grandparents want to help, but they worry that assistance won’t help to create financially responsible adults or that it will bring about dependence and lack of motivation. At the same time, Millennials who are fortunate to receive an inheritance might not feel ready for the risk and responsibility that comes with it.
 
Communicating these concerns can benefit the family as a whole. Properly managed, financial assistance to young adults could enable them to invest in themselves, whether through experiential traveling, further education or starting their own business. Individuals could pay off or avoid crippling credit card debt and instead contribute to retirement accounts for long-term compounding or buy a house in this low-interest rate environment.
 
Every case is unique and the decisions have to be made in the context of the family relationships, as well as financial and other considerations. Certainly, the beneficiary of financial assistance should be charged with the task of treating the money in the same spirit with which it was given, perhaps mindful of future generations as well.
 
From those to whom much is given, much can be expected. With proper, strategic planning and investing, having the financial assistance can help a young adult set the stage for a healthy, responsible financial life.
 

Ashley Greeff is a Vice President and Wealth Advisor at Evercore Wealth Management. She can be contacted at [email protected].