A Family Affair: Five Financial Values to Instill in The Next Generation

At Welch Hornsby, we often talk about how our team of advisors advocate for our clients by offering the financial guidance that positions them for long-term success.

It has been a long-standing value at our firm that creating financial prosperity for years to come does not apply solely to our individual wealth management clients. We see it as our responsibility to extend our services by preserving wealth over generations so that our clients’ children and their children’s children can enjoy life-long financial success and continue a legacy into the future.

Currently, American families are preparing for the largest transfer of wealth in history, with an estimated $68 trillion being passed down through inheritance and trusts over the next 25 years.

With so many assets in transition, it is critical for families to ensure that upcoming generations are equipped to responsibly manage this wealth and position themselves for even greater financial success.

You can start preparing the next generation for increased financial responsibilities by imparting these five values into your children and grandchildren’s money management philosophy.

Start From the Ground Up

Never underestimate the value of a fundamental job. If you own a company or family business, expose your children to all levels of the company hierarchy. If your child chooses to join the family business, ensure they earn respect and work their way up through various pathways within the company. While in college, encourage your student to take a part-time job to teach them the value of a dollar earned and help them understand they can’t solely rely on what is given to them.

Spend Less Than You Earn

As a young adult transitions into managing their own finances, it can be challenging to balance the lifestyle they want to maintain with their current earnings. This unbalanced mindset can lead to credit card debt that negatively impacts their financial wellness.

Teaching your children the basics of balancing their income and expenses is the perfect framework for segueing into other money management musts, such as how to maintain a budget and structuring a savings account.

Get Involved in Philanthropy

Whether it is through volunteer work or financial donations, teaching your children the value of giving back will help them appreciate even more than what they have been given. Those who are exposed to others in less fortunate circumstances are more grateful for their financial situations and are often less likely to take advantage of their wealth by overspending.

Teach the Pros and Cons of Compound Interest

Compound interest can be your best friend or your worst enemy. When calculated correctly, it is often a valuable asset for those with strong money management skills and can substantially improve investment performance. However, when it comes to loans and debts, compound interest can be a true stifle on overall financial performance.

It is important to train your children on the values of using compound interest correctly, and the dangers of how it can hinder their efforts due to missed or low payments. For more complicated matters such as these, it is best to work with a team of financial advisors to appropriately gauge the cost and benefits of compound interest.

Create Learning Opportunities

The best way for the next generation to become financially responsible is by learning through practical application. Creating situations for your children to have accountability and learn from their actions helps foster the value of responsibility. Inevitably, they will fail, and it is important that they learn from that process. Life is a struggle and overcoming these struggles by finding solutions in their own way is key to forming a foundation of money appreciation and financial sensibility.

We would welcome the opportunity to talk more about the future financial security of you and your family. If you have questions about how you can prepare the next generation of your financial legacy for the future, contact us today.

The information and data contained herein has been obtained from sources believed to be reliable, but is in no way guaranteed by Welch Hornsby as to its accuracy. Opinions and projections are as of the date of their first inclusion herein and are subject to change without notice to the reader. As with any analysis of economic and market data, it is important to remember that past performance is no guarantee of future results.

Written by Amanda A. Benson