See why children with distracted and cash-strapped parents are more likely to spend money as soon as they get it.

Cash-strapped parents who are caring for ageing relatives are neglecting to teach their children about important financial topics and may be sowing the seeds for another generation of financially illiterate young adults, according to a new report.

The annual ‘Kids, Parents and Money’ study of attitudes towards money was this year focused on the sandwich generation – the generation of parents who occupy the role of dual care-giver to both their own children and their parents – to see what was falling through the cracks.

The study of more than 1000 US children and their parents paid for by US fund manager T Rowe Price found most families with elderly dependants were, unsurprisingly, struggling financially but that this was having a corresponding impact on their ability to talk openly about money to their children.

“Parents who are dual care-givers are less likely to teach their kids about money and support them in other ways,” T Rowe Price’s senior financial planner Stuart Ritter said of the survey.

The survey of US school children aged between eight and 14 and their parents revealed the breadth and depth of the burden on dual care-givers who are emotionally and financially over-extended. It found 65% of sandwich generation members were spending more than $1000 a month on aged care.

It furthermore found they were more likely to be carrying debt with 70% of dual-caregivers who held a credit card carrying more than $5000 worth of debt on a permanent basis.

The additional time and financial resources being spent by the sandwich generation on elderly relatives was producing a situation where 73% of children surveyed didn’t feel like their parents were spending enough time with them.

The survey showed that although there was a broad aversion among parents to discussing money matters with their children, with around half reluctant to talking about financial matters, this number shot up to around three-quarters among the dual-care giver subset.

T Rowe Price’s Mr Ritter said it was important for families to be as open as possible about financial matters with children as they grew older as this would assist them with the transition into young adulthood.

“Members of the sandwich generation are in a tough situation, and one of the best things they can do to support their kids is share with them the challenges that are affecting the family’s money and time,” Mr Ritter said.

Spending habits were formed early and the study found that children with dual care-givers for parents were more likely to spend money than save it, with 70% agreeing with the statement “I like to spend money as soon as I get it” compared with 40% of the children of single care-givers.

The distraction of parents with extra responsibilities was also evident with 62% of dual care givers saying they had no idea what their children spent money on compared with 15% of parents who didn’t care for aged relatives.

Dual care-givers were also more likely to argue with their partner about financial matters, hide spending and have fewer savings than non-dual care givers.

They were also more likely to have raided an emergency fund, and used retirement or university savings over the past two years for everyday expenses.

Slightly less than half of respondents used a financial adviser or planner with slightly more than half choosing to go it alone. Only 2% of respondents used a robo-adviser.


This article was originally published by The Australian Financial Review on 1 April 2019. It represents the views of the author only and does not necessarily reflect the views of AMP.


Subscribe to our newsletter

Important information

This information is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability for any resulting loss or damage of the reader or any other person.