How money flows in families

Modern day living is hard and money is tight for many families. Thus, it is no surprise that the behaviour of families has become one of the focuses of economists. In turning their attention to the household, economists are analysing the underlying ways in which the rules of the market govern the consumption, production, and welfare of family members and the structure of the family itself.

The Simpsons Family

A family, or a household, can be seen as an economic unit and as “small enterprise”. Why? Because it combines capital goods, raw materials and labour. Furthermore, members of a household would usually pool their resources, at least to some degree, to provide for the welfare of all.

As in every economic unit, a family is exchanging goods and values. But how do these transactions take place and on which decisions are they based, especially when it comes to money? To answer this question, the British insurance group Standard Life analyzed how money flows in all directions between different generations of a family. They published their results in the report: “The family financial tree” (

Their insights can be summed up as following:

  • Many families only seem to talk about money when there is a problem or an important event in life, like a birth or death. Hence, when it comes to financial decisions, families are reacting rather than planning.
  • Family members usually are able to help each other financially. However, they are not likely to sit down with other generations of their families to discuss money or plan for the future.
  • Money is moving both up and down the family tree through up to four generations and can also jump generations.
  • Grandparents are providing a lot of financial help to their children and grandchildren. Parents are providing a lot of help to their children, too — even to grown up children.
  • Parents and grandparents support their children financially by investing in their education (40%) and their wedding costs (21%), for example.
IAM Family

If we take a look at the IAM family, which we consider the core value offering of our client IAM, we can see similarities to these findings:

  • In the IAM family ecosystem, money flows in different directions. From partners and clients to IAM, from IAM to partners, and between partners as well.
  • The IAM family members have a great sense of belonging and want to support each other. The support can also take place in form of investing in education of the other members, by for example giving master classes.
  • Another similarity is that in the IAM family talking about finances is rather an exception than routine. The IAM family is driven by other values, mainly non-economic, and the financial discussion is often uncomfortable.

Even though many of the insights of the research study might not be very surprising, it is interesting for us to see how similar the results are to the characteristics of the IAM family. By understanding the flow of money and its underlying decisions, we can tackle it directly and create new financial opportunities.