Corrections & Clarifications: An earlier version of this story cited the wrong year for the Northwestern Mutual Planning & Progress study.
Prince Harry and Duchess Meghan of Sussex have a lifestyle that’s beyond what most Americans can imagine. But their struggle to break away from their family – and its financial control – is close to home.
No matter a family’s income level, disagreements about money, independence and roles crop up.
That’s even more the case in family businesses, which John Davis of the MIT Sloan School of Management says account for half of U.S. publicly traded companies and two-thirds of the world’s businesses. The royal family's "business" is largely to provide ceremonial leadership in the U.K., which one brand consultancy estimates is worth $2.3 billion a year through its boost to tourism and other industries.
Families not running a business together also get enmeshed in each other's financial lives. Older generations are increasingly tied up in younger generations’ finances, an issue that can come to a head at life junctures such as marriage or the birth of a child, financial experts say. Such events can cause adult children or their parents to reassess their priorities.
In the case of Harry and Meghan, their decision to break away came eight months after the birth of their son, Archie. In their Instagram post last week announcing their decision, the couple cited their desire for "geographic balance" in raising their son between the U.K. and North America.
For members of family-owned businesses, “there are expectations of you, not just in your job but in your lifestyle,” such as which neighborhood you live in, says Davis, who is the faculty director of the Family Enterprise Programs at MIT’s Sloan School and advises multigenerational family businesses.
Those expectations “can feel confining – not only to the blood family member but especially to the spouse,” Davis says. “It’s a bind.”
In announcing their decision, Meghan and Harry said they wish to become "financially independent." That means they'll give up their share of the Sovereign Grant, the taxpayer-supplied fund for members of the royal family, which has covered 5% of their expenses. Their remaining income comes from Harry's father, Prince Charles, according to their website.
While they live on a much grander scale, Meghan and Harry still share an experience that's increasingly common for millennials: relying on financial support from parents. And even if the royal family's wealth is hard to relate to, the tensions from such arrangements are increasingly felt by many American middle-class families.
About one in six Americans say they receive financial support from their family members, including one-third of millennials, according to Northwestern Mutual’s 2018 Planning & Progress study.
Americans' views on when young adults should gain financial independence have changed. Only a quarter believe adulthood begins at 18, while one-third says it starts at 25, according to a Country Financial survey last year.
“It's often some sort of life event that gets them to trigger that independence,” such as getting married, says Troy Frerichs, vice president of investment services at Country Financial.
That can lead to discussions about financial goals and boundaries for a number of reasons, experts say. For instance, parents may decide that marriage signals an adult child's readiness for financial independence, while adult children may want to set goals for moving out of the parent's house if they find a better-paying job.
“It's awkward for American families, and it's awkward for royals, too,” says Chantel Bonneau, wealth management adviser at Northwestern Mutual. “I have many clients who are 21, 30, 40 years old who say, ‘My parents still pay for my cellphone,’ or ‘My parents will give me a down payment for a house, but then they have a say in the location of the house and the style.’ It's a double-edged sword.”
Of course, in the case of millennials who receive support from their parents, it’s frequently the older generation that’s looking to break things off – rather than the younger generation seeking to remove themselves from the situation – because of their concerns about saving for retirement.
But whatever the situation, experts point out guidelines that can help adult children and parents navigate discussions about finances, independence and expectations.
Be clear on what you want to achieve
To avoid unwelcome surprises, tell your family what you want to discuss before the conversation, says Bonneau of Northwestern Mutual. “If a child is going in with the expectation to ask for help buying a house, and the parent didn't expect that, then all of a sudden they are fighting,” she says.
Understand the intent
Like Meghan and Harry, adult children may be “more emotional and drastic than their parents” as they try to find their own path, Bonneau says. And parents may try to give unwanted advice. But the key is to assume positive intent, she adds. For instance, the unwanted advice from parents is likely coming from a desire to help their children avoid pitfalls.
Do your research
If you have a financial proposal, make sure you’ve run the numbers, Bonneau says. For instance, young adults asking their parents for help with a down payment on a house or car could show they can handle the monthly payments.
Set up plans for family businesses
Families with multigenerational businesses are often coping with diversity in views, geographic locations and careers, says MIT’s Davis. In that case, consider creating a formal family governance plan can help create a cohesive family culture, such as setting up annual family meetings. Says Davis, “Create good gatherings so the family stays together and enjoys each other.”
Aimee Picchi is a business journalist whose work appears in publications including USA TODAY, CBS News and Consumer Reports. She previously spent almost a decade covering tech and media for Bloomberg News. You can follow her on Twitter at @aimeepicchi.
This article originally appeared on USA TODAY: Meghan Markle, Harry show how families struggle with financial ties