As more millennials become parents, theyre intent on raising their kids with the one thing they never had: financial security.
Those kids are part of Gen Alpha, the post-Gen Z generation that a new Morning Consult report defines as children nine years old or younger. The majority of the 2,000 Gen Alpha parents surveyed (70%) are millennials.
Morning Consult used a cluster analysis to identify three core groups of Gen Alpha parents based on what they said 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 Gen X parents. But the Financially Fraught cohort was the largest (47%) and the youngest, with the most millennial parents, which the report says is indicative of how Gen Alpha parents will overall trend as more millennials move into parenthood.
The preoccupation with their childrens financial success is a sign that the effects of the Great Recession still linger for millennials (the oldest of whom turn 42 this year) more than a decade later. Much has been written about the economic plight of the millennial: Many of the oldest of the generation graduated into the 2008 financial crisis, struggling to land on their feet in a rocky job market all while shouldering massive student debt and facing rising living costs. When they finally started to gain financial ground, they were hit with a pandemic and yet another, albeit much smaller, recession. While the economy rebounded, it got a little too hot, and millennials came face to face with true inflation for the first time in their adult lives.
Millennials have had a much steeper hill to climb to afford the same lifestyle their boomer parents enjoyed: While their wealth has more than doubled since the pandemic began, they still hold only 7% of the nations wealth, compared to the 22% boomers held when they were around the same age, Fed data shows. Its no wonder, then, that millennials are so concerned about setting their children up for financial successmost have already sought out financial advice on how to best do that, Morning Consult finds.
The Great Recession left many millennials disillusioned with the idea of reaching or surpassing their parents level of financial success, and they still struggle to feel confident in their finances, Charlotte Principato, financial services analyst at Morning Consult, tells Fortune. They faced an unexpected uphill battle at the beginning of their careers, and they want their children to be better prepared for economic uncertainty than they were. To do that, theyre taking steps to lay a strong foundation of savings and financial education.
Gen Alpha is already on their way to wealth
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 college savings account at the top of the list. Many of those who already checked it off their list did so before their child turned four, while those with plans to do so are typically waiting for their child to turn 10 or older. Some Alpha parents (under 10% each) have already opened CD accounts, money market accounts, and an IRA or Roth IRA for their kids. Just over 20% each plan to open one in the future.
Having struggled with the burden of student loan debt for their own education, Gen Alpha parents are also more willing to help cover the costs of their childrens higher education than all parents of those ages 18 or younger are (Morning Consult surveyed 1,000 people in this cohort for comparisons sake): 39% versus 35%.
And theyre being open about it all, already talking about financial topics with their kidsnot surprising for a generation who isnt afraid to discuss money. More than half of parents have already chatted with their child about spending, savings, and budgeting, and different types of money like cash and credit. Many did so before their child even turned four, but these discussions were more likely the older the child.
Parents are encouraging their children to be more financially independent, sooner, the report states.
But despite all their economic worries, most (77%) of Gen Alpha parents are very or somewhat confident in their childs future financial securityalthough that confidence wanes the less wealthy they are.
While Gen Alpha parents may be more anxious about their own finances, the same cant be said about their childrens, the report reads. These parents are doing their best to future-proof their kids wallets, and this planning and prepping is translating to more confidence in their offsprings financial futures.
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