Faculty Findings/Summer 2008

What Does Money Mean to You?

By Mary Hamann

It’s the same $1,000.
If you earned it, you’ll likely spend it on a big screen TV, fritter it away buying a summer wardrobe or a set of golf clubs.
But if your grandma gave it to you as a nest egg, you’ll save it, nurture it, and likely pass it on to your kids.

Marketing Professor Tonya Bradford has studied intergenerational gifting patterns and the emotions that people attach to money. To gain insights, she interviewed 98 individuals from 59 families about how money and other assets have been passed down in their families. She spoke to families across economic classes, both African-American and white, and family members ranging in age from their early 20s to mid-90s. She engaged with the family members at financial seminars and around the dinner table, and at significant family moments, such as during hospital stays and at college graduations.

Bradford discovered that people perceive their relationships to family gifts as intensely personal, even approaching reverence, because they identify the gift with the giver. For example, a woman recalled valuing the money she received from her father because of the sacrifice it represented. “His beginnings were meager ... I know it’s Dad’s blood, sweat and tears ... and he’s giving it to me.”

Explicit and Implicit Instructions

According to Bradford, many intergenerational gifts come with instructions about how the recipient is intended to care for that asset, be it money or property, through certain expected behaviors. In low-income families, the money commonly is given as an emergency fund to provide security. In more affluent families, gifts are intended to underwrite future dreams, such as continuing education, home ownership or a desired career change.

Even when gifts are given without explicit instructions, family members often communicate expectations, Bradford found. A couple described how they planned to give their daughter money on her graduation day with the clear message that she may do with it what she desires. They said that they fully expected, however, that she would use the money in ways they value, such as purchasing books or putting it in a savings account.

In her research, Bradford found that the recipient of a family gift will decide whether or not to accept intergenerational gifts—and their intended meaning—based on how they value family relationships. She interviewed a middle-aged woman who had received bequests from both her mother and her father. The woman described carefully setting aside the money from her mother, with the hope that she would be able to do something special with it to honor her. She rejected her father’s gift of property, explaining, “I had no relationship with my father. The property had no meaning to me [so I thought] sell it.”

Unlike the simple reciprocity you find in most gift-giving, Bradford says that family gifts carry with them a social debt that extends beyond the moment into future generations. “If your grandmother gave you $10,000, you’re not going to give your grandmother back the money sometime,” she explains. “So the only opportunity to reciprocate is to maintain the gift and pass it forward to your children and grandchildren.” Bradford interviewed several individuals who were in serious financial need, but would not spend gifted money because they were holding it for their children.

Implications for American Society

Drawing on her 17-year background in the financial services industry before entering academia, Bradford believes it is important for marketers and policy-makers to learn more about how individuals value both the exchange and sentimental components of money, because of how these perceptions influence consumer behaviors.

She asks the question, “Can we get people to attach emotion to money earned and saved in a similar way to how they feel about money given to them?”

This is not only an academic question. At the same time, as American society is increasingly marked by consumerism, materialism and individual debt, a remarkable generational transfer of assets is set to occur. Members of the baby boom generation have amassed upwards of $40 trillion in assets, much of which is expected to be transferred to their children and grandchildren in the next 20 to 30 years. Bradford says that the manner in which that money and property are given—and the messages which are embraced by recipients—may determine whether our nation moves down a path toward individual financial responsibility or not.

The stakes are high, and younger Americans may not have the financial discipline of their forebears. With the rise of widespread consumer credit not anchored in assets, many Americans now live on a financial precipice in ways earlier generations could not. Bradford points out that the savings rate in America was zero percent in 2006 and is only slightly higher now.

In her research on how families attach meaning to money, she sees implications for marketers and policy-makers seeking to interest consumers in financial services as well as life insurance, long-term care and philanthropy. Noting how gifted money is often carefully set apart and saved for a particular use, Bradford wonders, “Can we develop financial products that people can get excited about because they view them as extending their family identity two to three generations into the future?”

—Mary Hamann is the editor of Notre Dame Business.