Post-financial crisis, a new generation’s views on money

The impact of the Great Recession on children matters in a number of ways. These are the formative years of roughly ages 11 to 13 that shape the overarching goals and priorities for the rest of their life. And soon they will become tomorrow's renters.


In 2008, adult conversations shifted. After nearly a decade of headlines on terrorism and the resultant wars, suddenly signs of financial trouble demanded top attention. Within months, the global financial crisis, considered by many economists to be the worst financial downturn since the Great Depression of the 1930s, settled in around the world.

Typical American families did not fare well. Between 2007 and 2009, the total wealth of 63 percent of all Americans declined. As of November 2009, one in seven mortgages was delinquent. By March 2010, one in four people were “under water;” that is, they owed more on their mortgages than their houses were worth on the market.

Adults were not alone in experiencing the painful events of the late 2000s. Children, too, were deeply influenced by the economic malaise.

The impact on children matters in a number of ways-one of which is that many of our dominant traits are formed when we are pre-teens, roughly ages 11 to 13. This is when children struggle to make sense of the events they see in the world around them- when they wrestle with concepts and ideas, fit the pieces together and work out in their own minds what matters. The conclusions they reach shape their overarching life goals and priorities.

As the adult environment changed, it seemed clear that a new generation would be taking shape. Individuals who were 11 to 13 in 2008 saw a world that looked substantively different to them than the world did to 11 to 13 year olds over the preceding fifteen or so years.

It would have been almost impossible for them to escape the phrase “housing crisis.” Even the youngest understood that high gas prices were related to cutbacks in travel and why the family was vacationing in the backyard that year.

As of December 2009, one in seven children was living with a parent who had lost his or her job. In the final quarter of 2009, nearly 20 percent of all households reported that they had not always had enough money to buy the food they needed during the year.

Being 11 to 13 in 2008, meant you were born in 1995-1997. That, I suspect, was the switch point-the cut off for Generation Y and the beginning of the new generation, one that I call the Re-Generation.

This new Re-Generation is shaped by the recession, steeped in reality, well-aware of the need for restraint and responsibility, and challenged throughout their lives to Rethink, renew, and regenerate.

Many events influenced our youngest generation; but the economy is almost certainly near the top of the list. How has this generation made sense of recent economic events? Five themes emerge:

Uncertainty: It’s not clear what the rules of the game will be in the emerging economy. A college education no longer guarantees a great job. Home ownership looks to be less desirable than ever before, a more risky proposition. Expect this generation to demand pragmatic evidence of the benefits of any investment, including in education.

Less emphasis on materialism: Many families are rethinking their material priorities. Volunteerism is up. Community gardens and other forms of neighborhood cooperation and sharing are on the increase. A growing number of young people will search for self-sufficient life-styles.

Smart frugality: The Re-Gens are more financially sophisticated than their predecessors. Their financial education started early thanks to the Internet, in kids sites such as Club Penguin, where as a penguin avatar they play games and earn virtual coins and Farmville where life on a virtual farm includes farm coins. They will bargain for the best deal.

Savings and debt avoidance: In comparison to the optimistic Gen Y’s, this will be a generation with an inclination to save and a reluctance to incur debt. A research study of 12-18 year olds in Australia cited that more than 50 percent had started saving for technology gadgets and cars and more than 33 perent paid their own phone bills. The study also indicated that they disliked borrowing money.

Getting rich through reality: This new generation has been weaned on reality TV -not the “we can do it” optimism of the Boomer’s Mickey Mouse Club, the perky interpretation of shifting family structures of the X’ers Facts of Life, or the Y’s glamorous escape into the unreality of 90210- but the images of real people, like you and me, taking on big challenges-typically in pursuit of the new Great American Goal: $1 million. To many in this generation, the ability to get that big break seems more real than ever before.

Author: Tamara J. Erickson