While middle-class families of all types are struggling, it's the "modern" or nontraditional ones that seem to be having the hardest time feeling financially secure. Among traditional families, defined as heterosexual couples with at least one child under age 21 at home, just under half say they are either "making ends meet," "struggling financially" or "poor," according to "LoveFamilyMoney," a new Allianz study of over 4,500 Americans between ages 35 and 65.
In comparison, almost 60 percent of so-called "modern" families report feeling the same way. Close to half of modern families say they are living paycheck to paycheck, compared with 41 percent of traditional families. According to Allianz, about 20 percent of American households are traditional today, compared with 40 percent in 1970.
The "modern" family structures include multigenerational families (with three or more generations living together), single-parent families, same-sex-couple families, blended families, families with older parents and young children (parents over age 40 with at least one child underage 5 at home) and boomerang families (parents with adult children living at home).
These modern families are less likely to say they feel a "high level of financial security" (30 percent versus 41 percent for traditional families), and 36 percent of modern families have collected unemployment compared with just 21 percent of traditional families. Modern families are also twice as likely to have declared bankruptcy as traditional families (22 percent versus 11 percent).
The reason for that disparity is largely due to disruptions that took a family from traditional to "modern," including death, divorce, single parenthood and remarriage, says Katie Libbe, vice president of consumer insights for Allianz Life Insurance. "The stability of the traditional family" is what encourages the great financial security, she says, noting that among modern families, it's the same-sex couples that exhibit the greatest level of security, most similar to traditional families. They're also more similar to traditional families when it comes to confidence about meeting their future goals.
Libbe emphasizes that many families, even those who consider themselves middle class, say they're having a hard time. "A lot of families are struggling ... the economy is getting better, but it doesn't seem to be making its way down to everyone," she says.
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One good sign, though, is just how close all types of families are to each other. "One thing we found that was positive, especially for modern families, is that all families are closer than ever," Libbe says. Among all types of families, people report feeling part of closely knit relationships. Parents say they feel like they are friends with their children, and they're more likely to discuss formerly taboo topics like money, which can also help children learn how to manage their finances as they get older.
"Parents are talking with their kids and other family members and teaching them lessons around spending patterns and debt levels," Libbe adds. In fact, modern families might even be better at this than traditional families. The survey found that modern families are more likely to "talk openly" with their kids about their money situation, and almost half of modern families have "actively encouraged" their kids to invest and save for retirement, versus just 38 percent of traditional families.
She also emphasizes that despite the finding that traditional families reported higher levels of financial security on average, the takeaway message is not to strive to be a traditional family. Indeed, many people pass through a variety of the family structures throughout their lives. For example, a divorced single parent might have previously been part of a traditional family structure.
Instead, the message is to get help managing your finances if you need it, either from an advisor, workplace resources or elsewhere, and focus on balancing short- and long-term goals. Families might want to spend money to create a fun summer vacation, but instead they could plan a road trip and put the leftover money away for college or into a retirement savings account, for example.
Setting goals and working to meet them is one of the best things all types of families can do to improve their own finances.
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