PenPenWrites

When it comes to financial decisions–paying off debt, buying a car–we just don't understand our 20-something kids. Why would they buy a flashy car and ignore that student loan? And when we give them the benefit of our advice, why don't they take it?

Turns out, there's a scientific reason for that. There's a big difference between the way a 20-something's brain works and the way ours does, especially when it comes to financial matters. Our brains have grown and matured into a different set of skills than the one we had at our children's age. That's a point Barbara Strauch makes in her book, The Secret Life of the Grown-Up Brain. She takes note of work done by Harvard economics professor David Laibson, who has done research in the field of neuroeconomics (how people use their brains to make financial decisions). Laibson has found that when confronting complex money issues, such as mortgage or interest rates, those in middle age (40 to 65) make the best choices. Not only that, the "sweet spot" for having the best judgment in matters of personal economics is the 50s.

On the other side of the divide are our grown children–especially the newly grown in their 20s (emerging adults)–who are just coming into their own and are facing critical personal economic decisions: not just how to pay for beer but whether to rent or buy housing, how much debt it's safe to carry, the financial implications of taking one job over another. Their brains are skilled–their memories and brain speed are sharper than ours. But brain research suggests that our minds have developed in a way that gives us better, more long-range judgment about financial matters. Theirs are at a less mature stage. And that's where the conflict comes. Just because they have adult bodies and hormones and jobs or positions with responsibilities, their brains are in a "primitive" stage in terms of neuroeconomics.

Which doesn't mean that unsolicited advice won't help them avoid the financial shoals of life. Or that giving advice is necessarily an exercise in frustration. It just means there may be a reason why they don't see the wisdom of our financial ways.