Building a Legacy: Teaching Your College-Aged Children About Wealth Management

– by Jeff Sievers CFP®, CLU®, CHFC®, CASL®
Senior Private Wealth Advisor

What has been dubbed “The Great Wealth Transfer,” generational wealth has become increasingly relevant these days. While it may seem like a distant concern for your college-aged student, it may keep you up at night, as you plan for future circumstances. That is why it is important to start preparing your young adults now and teach them the value of wealth management. By starting the conversations now, it mitigates potential risks. If not, this life-changing event can catch your heirs off-guard. So, how can parents effectively educate their college-aged kids about generational wealth management? Here are a few strategies:

Start Early Conversations:
Begin discussing financial matters and the importance of wealth management early on. Create an open dialogue about family finances, investments, and long-term goals. By normalizing these conversations, you can instill a sense of financial responsibility and awareness in your children from a young age.

Lead by Example:
Actions speak louder than words. Demonstrate responsible financial habits and decision-making to them. Whether it’s budgeting, saving for retirement, or investing in assets, let them observe firsthand how you manage money and prioritize long-term financial goals.

Educate on Financial Literacy:
Equip your children with the necessary knowledge and skills to navigate the complex world of finance. Advise them to take courses on personal finance, investing, and wealth management. Additionally, introduce them to resources such as books, podcasts, and seminars focused on building wealth and financial independence.

Introduce Them to Your Financial Advisor or Wealth Manager:
If you already partner with an independent financial advisor and team, set up an introductory meeting with them and your child. Chances are you have already discussed your family dynamics with your advisor team. Now that your child is in college, it could be a good time for your kid(s) to start building trust and a relationship with your advisor, accountant, and legal team.

Introduce Investment Opportunities:
Teach your children about different investment vehicles and strategies for building wealth. Whether it is stocks, real estate, or entrepreneurship, expose them to various avenues for generating passive income and achieving long-term financial growth. Have them start investing early and diversify their portfolio for greater stability.

Promote Financial Independence:
Empower your children to take control of their finances and make informed decisions. Encourage them to establish their credit history, manage debt responsibly, and cultivate good financial habits. Instilling a sense of independence early on will prepare them to handle their finances effectively in the future.

Encourage Philanthropy and Giving Back:
Generational wealth is not just about accumulating assets; it is also about making a positive impact on society. Teach your children the importance of giving back to their communities and supporting charitable causes that align with their values. Cultivating a spirit of generosity and social responsibility can enrich their lives and leave a lasting legacy beyond monetary wealth.

Foster Long-Term Thinking:
Help your college-aged kids adopt a mindset focused on long-term financial planning and wealth preservation. Encourage them to set realistic goals, create a financial plan, and regularly review and adjust their strategies as needed. By thinking ahead and making strategic decisions, they can safeguard their financial future and pave the way for future generations.

Teaching your college-aged kids about generational wealth management is not just about passing down monetary assets; it is about imparting valuable knowledge, skills, and values that will benefit them and their descendants for years to come. By starting early, leading by example, and fostering a sense of responsibility and independence, parents can empower their children to build a solid foundation for their financial future and contribute to the legacy of generational wealth.