When It's Ok To Ignore Your Parents

If there is one thing parents love to do, it’s give advice and you know what, most of the time they are right. Sunscreen actually does work, vegetables are good for you and being polite doesn’t cost much, but it’s worth a whole lot. However, not all advice is good advice. According to a Fidelity and a TIAA-CREF study, most young adults (about 33%) utilize their parents as their top financial resource. Are your parents really the best financial source? Here are two reasons why not:

Different Economic Conditions

When we look back at different generations, we find vastly different economic environments. The generation most commonly looked at as “The Greatest Generation” had a different financial experience compared to both Baby Boomers and Millennials. The Greatest Generation was born into The Great Depression, they worked for a single employer their whole life and they retired with a pension. Baby Boomers came of age when, college was extremely affordable, interest rates where in the double digits, 401ks were new and the stock market saw tremendous growth. Millennials have student loan debt, have to compete in a global economy and have more computing power on their cell phone than President Clinton did at his desk. 

Different life experiences and dissimilar economic conditions mean you must be able to adapt your financial strategy. Baby Boomers weren’t given pensions and had to save more on their own. Millennials won’t have the same social security benefits as their parents. What worked for one generation won’t necessarily work for another.

Boomers & Seniors Aren’t Doing That Well

When you take advice from someone, you hope that they have a good track record of their own. I’d be more inclined to take exercise advice from The Rock as opposed to Chris Christie. The unfortunate reality is that Seniors and Baby Boomers are not in a great financial position themselves. According to a survey by GoBankingRates, 45.3% of Boomers and Seniors (aged 55+) have less than $10,000 saved for retirement. Only 22.4% have more than $300,000 saved. More than 8 in 10 Boomers underestimate the percentage of their income will be needed to cover their health care costs per the Insured Retirement Institute.  

You can always learn something from your parents. Sometimes they are a model of what to do and sometimes they can serve as a model of what not to do. If your parents are doling out financial advice, be sure to ask them about their financial situation to make sure they are on track. Remember, your financial situation is always going to be different than theirs.