Millennial parents are raising “Gen Alpha” children to build wealth
As more millennials become parents, they want to raise their kids with what they never had: financial security.
These children are part of Gen Alpha, the post-Gen Z generation, which a new Morning Consult report defines as children aged nine or younger. The majority of the 2,000 Alpha Parents surveyed (70%) are Millennials.
Morning Consult used cluster analysis to identify three core groups of gen-alpha parents “based on what they believe were the most important factors when thinking about raising their children,” the report says . The Idealists were the wealthiest group, and the Pragmatists were the oldest, with the most Generation X parents. But the financially strained cohort was the largest (47%) and the youngest, with the most Millennial parents, which the report says is a Indicative is how Gen Alpha parents will fare overall as more millennials enter parenthood.
Preoccupation with their children’s financial success is a sign that the effects of the Great Recession are still felt for millennials (the oldest of whom will be 42 this year) more than a decade later. Much has been written about the economic plight of millennials: Many of the generation’s oldest graduated during the financial crisis of 2008, struggling to find a foothold in a rocky job market while shouldering massive student debt and facing rising costs of living. When they finally started to gain ground financially, they were hit by a pandemic and another, albeit much smaller, recession. Things got a little too hot while the economy recovered, and millennials faced real inflation for the first time in their adult lives.
Millennials have had to climb a much steeper hill to afford the same lifestyle their boomer parents had: while their wealth has more than doubled since the pandemic began, they still own just 7% of the nation’s wealth, by comparison with the 22% of boomers held back then, Fed data shows they were about the same age. It’s no wonder Millennials are so intent on helping their kids be financially successful – most have already sought financial advice on how best to do so, finds Morning Consult.
“The Great Recession left many millennials disillusioned with the idea of matching or surpassing their parents’ level of financial success, and they are still struggling to feel secure about their finances,” said Charlotte Principato, financial services analyst at Morning Consult wealth. “They faced an unexpectedly tough battle early in their careers and want their children to be better prepared than they are for economic uncertainty. To do this, they are taking steps to lay a solid foundation for savings and finance education.”
Gen Alpha is already on the road to riches
Most gen-alpha parents have already opened or plan to open savings accounts for their little alphas, Morning Consult finds, with a general savings account and a college savings account topping the list. Many of those who have already checked it off their list did so before their child turned four, while those planning to do so are usually waiting for their child to be 10 or older. Some alpha parents (less than 10% each) have already opened CD accounts, money market accounts, and an IRA or Roth IRA for their children. Just over 20% plan to open one in the future.
Alpha parents, who are struggling with the burden of student loan debt for their own education, are also more willing to pay for their children’s college education than any parent aged 18 or younger (Morning Consult surveyed 1,000 people in this cohort for comparison): 39% vs. 35%.
And they’re open about it, already talking about finance with their kids — no wonder for a generation that’s not afraid to talk about money. More than half of parents have spoken to their child about spending, saving and budgeting, and different types of money like cash and credit. Many did this before their child turned four, but these discussions were more likely the older the child was.
“Parents are encouraging their children to become more financially independent earlier,” says the report.
But for all their economic worries, most (77%) of Alpha parents are very or somewhat confident about their child’s future financial security – although that confidence dwindles the less wealthy they are.
“While Gen Alpha parents may be more concerned about their own finances, the same cannot be said of their children’s,” the report said. “These parents are doing their best to future-proof their children’s wallets, and that planning and preparation leads to greater confidence in their children’s financial futures.”
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