Young Adults' Financial Freedom

Summary

• The Merrill Lynch Age Wave survey finds that a majority of young adults accept financial assistance from their parents but consider such acceptance “a bad thing”.
• Brenda Jubin: “The Skeptical Investor” author advises thinking about the downside before committing to an investment.
• Thought For The Day: There’s a strong connection between financial independence, self-respect and personal sovereignty.

Global Real Estate

"The greatest macroeconomic risk to global housing markets stems from a tightening of financial conditions. Central banks appear determined to lean against the headwinds of a recession. In the long run, they may fail but in the near term, the global housing market still looks unlikely to implode." (Colin Lloyd)

The Skeptical Investor

"Stepek summarizes some of the key findings of behavioral finance and suggests ways of keeping subversive emotions in check, such as thinking about the downside before committing to an investment, making as many decisions as possible in advance and keeping a detailed investment journal." (Brenda Jubin, review of "The Skeptical Investor")

Millennials, Gen Z, And Parental Support

"A full 70% of the early adults in the Merrill Lynch Age Wave survey said they've received financial support from their parents in the past year and 58% said they couldn't afford their current lifestyles without it. The most common types of financial support: cell phone plans; food; school costs and car expenses. Parental financial support of early adults, said Ken Dychtwald, CEO of Age Wave, is 'the new normal.'" (Next Avenue)

Thought For The Day

"Surprising findings from a new survey of Americans age 18 to 34," goes the subhead of a Next Avenue article titled "How Young Adults Feel About Financial Independence From Their Parents."

So I was prepared to be surprised, though I wasn't sure whether that would be pleasantly or unpleasantly surprised. Turned out to be a little of both.

That about two-thirds of young adults characterized support of 25- to 34-year-olds as "a bad thing" is a good thing, because it means they grasp the implications for achieving independence. That there was a divide in opinion on financial responsibility between men and women was an unpleasant surprise, with 72% of women endorsing saving for the future and paying down debt compared to only 60% of the men, and 40% of the "men" considering it a financial priority to enjoy life now vs. 28% of the women.

Survey partner Ken Dychtwald of Age Wave distilled the key point, as Next Avenue puts it, that "financial independence defines adulthood - more than owning a home or starting a family." And how could that not be true? There's a strong connection between independence and self-respect that even a person living in a mansion will not feel if somebody else paid for his home.

Many years ago, a friend related a dilemma. His parents wanted to give them a generous gift, and he was eager to accept it because he and his family were struggling financially. But it bothered him that his parents didn't treat them particularly respectfully, and often made demands of them that they felt undermined their vision for raising their family. I advised them not to accept the gift. Even were they to borrow that same sum from a bank, which they would have to pay back, principal and interest, they'd come out ahead. After all, the banker didn't care what they did on Sundays. But more importantly, only through this declaration of independence would they truly come to recognize their own personal sovereignty. That is the real gift awaiting today's young adults once they succeed at weaning themselves off of parental support.

This daily digest will resume publication on Monday, April 29.

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