Wealth Management

Strengthening family finances in Australia through meaningful conversations

Matthew Swieconek
21 September 2023
7 min read

In our comprehensive report, Conversations that count: Strengthening family finances in Australia, we explore how Australians talk about money and what can be done to elevate these conversations in a meaningful way.

Our research shows that 90% of Aussies are having financial conversations with their families and around 40% are doing so on a regular basis. This is particularly true for younger Australians (43% Gen Z, 34% Millennials) who are citing the rising cost of living as a motivator to kickstart financial conversations.

Yet for 3 in 5 Australians, there are challenges or concerns that would stop them from speaking openly about finances.

Findings also show that the younger the respondents are, the more likely they are to be concerned or face challenges around having financial conversations. More than 7 in 10 Gen Z (71%) have challenges or concerns that would stop them from speaking openly with family about finances compared to less than half of Baby Boomers (45%).

The importance of intergenerational financial discussions cannot be overstated. Aside from addressing some of the concerns around initiating financial conversations, we also need to look at the topics and level of depth surrounding the financial conversations that are taking place. When it comes to strengthening family finances, this is a pivotal yet often overlooked aspect. Read on to explore how to strengthen family finances through meaningful conversations.

The landscape of familial financial conversations

Financial discussions within families are common in Australia, with nearly nine in ten Aussies engaging in them. This represents a whopping 88%, with 43% doing so once a week or even more frequently, highlighting the importance placed on these discussions.

This frequent exchange of ideas has a tangible impact. Of those who engage in weekly or more frequent financial discussions with their families, 46% have received financial advice, compared to 40% who have not. It shows that these discussions facilitate knowledge sharing and encourage seeking expert guidance.

Barriers to meaningful financial conversations

Meaningful conversations about money extend beyond daily expenses. They encompass a holistic perspective of financial health, covering both immediate and long-term aspects. However, specific barriers that hinder open financial dialogue within families exist:

  • Generational hurdles. Gen Z, Millennials, and Gen X report feeling uncomfortable or a perceived lack of benefit when discussing finances with their families. Interestingly, challenges around money talk within the family intensify as age decreases. Gen Z takes the lead at 71%. Millennials come next at 59%, followed by Gen X at 57%. Baby Boomers, in contrast, seem more at ease, with only 45% facing similar barriers.

  • Level of comfort. Nine in ten Australians say they feel very comfortable (50%) or somewhat comfortable (40%) discussing finances with their immediate family members. Yet, when we asked if there were any barriers that would prevent people from speaking openly with immediate family about finances, 56% said they have challenges or concerns that would stop them.

  • Income. Enthusiasm for these discussions also increases with income. Those earning more than $150K exhibit a staggering 74% positivity towards these talks, compared to 40% of those earning less than $50K.

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Short-term vs. long-term financial conversations

In our fast-paced lives, short-term financial topics often dominate family discussions. The most discussed topics with immediate family members include saving and budgeting (65%), navigating the rising cost of living (52%), insurance (35%), taxation (34%), debt (34%), and superannuation (34%).

Interestingly, our report shows that the nature of financial conversations varies across generations. Gen Z, the youngest group, is 71% likely to discuss saving and budgeting. In comparison, 58% of Baby Boomers are more concerned with the cost-of-living crisis, reflecting their focus on immediate financial concerns.

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However, it's vital to recognise the neglected, but equally crucial, long-term financial topics like retirement planning, investment strategies, wealth transfer, and estate planning. While discussions on immediate financial concerns dominate discussions, long-term planning topics that significantly impact wealth building need more attention. These topics include estate planning and inheritance, retirement plans, and investing, which comprise 15%, 24%, and 26% of financial conversations.

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The report highlights that ignoring these issues can have far-reaching consequences as they hold immense importance for wealth building and securing a stable financial future. Short-term needs should be balanced with long-term discussion points as they lay the foundation for financial security in the future.

How parents can initiate financial conversations at any age

Parents play a pivotal role in initiating and nurturing open dialogue around finances, setting the tone for financial education within the family. For young children, this means starting with the basics. Teach them about the value of money, the art of saving, and the importance of budgeting.

As children grow into teenagers and young adults, it's time to introduce more complex concepts. Teach them about investment and the magic of compounding. Help them navigate the intricacies of student loans and the rising costs of higher education.

By imparting these skills, parents equip their children with the tools to make informed financial decisions.

How to empower children to initiate financial conversations

Empowering children to take the lead in financial discussions is an investment in their future economic well-being. Here's how you foster the right environment for them to feel comfortable to initiate financial conversations.

  • Encourage curiosity and questions: Create an environment where children are encouraged to ask questions about money, savings, and financial matters. Welcoming their curiosity nurtures their natural desire to learn and understand financial concepts.

  • Cultivate financial confidence: Instil financial confidence by involving them in age-appropriate financial decisions. Let them make choices, such as budgeting for outings, saving for a desired item, or managing their weekly allowances. This hands-on experience instils confidence in their ability to make sound financial choices.

  • Provide a safe space for open dialogue: Establish a non-judgmental environment where children feel safe sharing their financial concerns and ideas. Assure them that these conversations are about learning, not blame. This safe space encourages children to initiate discussions about their financial aspirations and challenges.

Empowerment through professional advice

One noteworthy revelation from the research is the empowerment that comes from professional financial advice. An overwhelming 92% of Aussie Gen Zs and Millennials agree that professional financial advice equips them with the financial literacy needed for informed conversations within their families.

23% of Gen Z and 20% of Millennials even leverage their family member's access to professional financial advice. However, despite this recognition, 83% of Gen Zs and 52% of Millennials have yet to seek financial advice from professional planners.

The impact of financial advice on family financial conversations

Our research shows that if Australians currently receive or have received advice, they are more likely than those who haven’t to:

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The impact of professional financial advice on family discussions is evident. Those who have received advice from a professional financial adviser are 93% more likely to engage in financial conversations with their families.

On the other hand, those who haven't sought professional advice are 56% more inclined to base all their discussions on the rising cost of living rather than engaging in a broader financial discourse. Thus, reflecting the need for expert guidance in driving intergenerational money discussions.

Key takeaways

Meaningful family financial conversations aren't just about money but about tackling worries in the present while fostering security and confidence in the future. By breaking down barriers, diversifying discussion topics, and encouraging open dialogue, families can harness the full potential of these conversations. It's a journey towards financial empowerment and stability, and Findex is here to guide you and your family every step of the way.

Download the full report to gain a deeper understanding of the dynamics of financial conversations within Australian families and get practical steps on how to have these conversations with your family with our complimentary guide on Navigating financial conversations across generations.

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Author: Matthew Swieconek | Head of Investment Relations