The Generational Wealth Planning Guide for First-Gen Parents with Wealth

Passing down financial wisdom is a benefit few families can take advantage of – and while it’s a blessing, it also adds extra pressure to your parenting shoulders.

In our previous blog in this series, we debunked some common myths surrounding generational wealth. Creating a legacy of financial success goes beyond simply accumulating assets or choosing appropriate charities. It is also about fostering an environment where your children and grandchildren can manage and grow that wealth responsibly.

As a first-generation parent with substantial wealth, it can be particularly challenging (and rewarding!) to raise financially savvy children. You want to give them all the experiences, knowledge, and opportunities you  have worked so hard for, but – as in life and parenthood – there’s no single roadmap to guaranteed results. 

The good news is that there are real, actionable steps you can take to navigate this crucial aspect of generational wealth planning. Read on for our top expert-approved strategies you can use to pass down financial wisdom within your family. 

1. Knowing Your Impact as a Parent

It’s truly never too early to start teaching your children about money. In fact, a study from the University of Michigan found that “children as young as five already had distinct emotional reactions to spending and saving money, and that these translated into actual, real-life spending behaviors.”

Still, it's easy to feel anxious with money talk around the dinner table. While we often recognize that those early conversations would have benefited our own financial journeys, 80% of American parents feel uncomfortable discussing finances with their kids.

Remember that your children will develop habits, ideas, and feelings about money whether you talk to them or not – and you have an opportunity to start that journey off on a positive note. 

2. Talking About Money 

First-gen parents often have anxieties about raising children around wealth: What if they become spoiled? How do I even open those conversations? Am I confident in all the knowledge I want to share?

If those concerns have been floating through your head, you’re not alone. To get started, it’s best to consider what stage your child is in to figure out what concepts they’ll be able to grasp:

• Want to open the door to these topics? Consider using a game- or activities-based approach for younger kids – even something as simple as a round of Monopoly or The Game of Life can pique their interest! Providing regular allowances and paying for extra chores can also teach the value of earning and saving at an early age.
• For older kids and teens, consider creating a simple budget together based on an allowance that allots for savings, necessary expenses, and fun. Additionally, it may be worthwhile to invite your more mature teen along for the next check-in with your financial advisor, which can give them a taste of what all you do for the family finances.

Whichever approach you land on, keep in mind that transparency about family finances is key in instilling hard work and responsibility. You may want to hide your money-related stress from your kids, but it can actually be helpful for them to see how you handle those situations when they arise. 

Every child and family is different, so your money conversations will likely be different from your neighbors’ – and that’s okay!

3. Educating Through Experience

Talking about money is great, but some kids learn best with a hands-on approach. Here are a few strategies you can use to incorporate real-life financial experiences into your child’s learning:

• Host Family Budgeting Meetings: Use these moments to explain the importance of living within your means and planning for future goals, and consider including them in your annual vacation planning – perhaps each child could “own” the research and planning of one part of the trip, such as the hotel, flights, or meals. 
• Give Together as a Family: Philanthropy fosters financial responsibility while teaching empathy and social awareness. As you select your charitable organizations for the year, ask your children to think through which charities they would most like to support and encourage them to do some research on where those donated funds end up. 
• Practice Smart Shopping Habits: Shopping with your kids can feel like pulling teeth some days, but even regular trips to the grocery store or back-to-school shopping trip each fall can offer opportunities for financial lessons. Guide your children on making informed decisions by explaining price comparisons, impulse purchases, and the value of delayed gratification.
• Set Goals Together: At the beginning of the summer, have each child set a goal for a purchase or experience they’d like to earn through the next few months. Then, work together to craft a plan for how they’ll earn and save those funds – the more specific and detailed the plan, the better!

4. Planning for the Future

For most people, a college education is the largest investment (beyond a home purchase) they’ll ever make, and it can have a lifelong impact on both earning potential and overall finances. While your children are prepping for the SAT and narrowing down their dream school, those expenses might not even be on their radar. 

As they think through their future career options and colleges of choice, use it as an opportunity to discuss why investing in yourself and growing your skills is a worthy place to put your money – but that it’s also a big responsibility.

Additionally, set aside time to discuss:

• Tuition Ranges: While tuition at a public, in-state school runs about $10,662 per year, an out-of-state public school will cost closer to $23,630.³ It’s best to be transparent about what your expectations are as far as tuition costs before they start applying to schools.
• Financial Aid: Work together to research whether any financial aid is available or not based on your wealth status.
• Your Retirement: Be upfront about how you need to balance their educational goals with your other long-term financial goals, like retirement. 
• How You’ll Help Them Get Started: From opening their own starter credit card to giving a stipend for books and living expenses, share  how you plan to support their first experiences with true financial independence.

Proactive communication and intentional financial education are essential for building a bridge between you and your family’s future generations. By embracing your role as a financial mentor and using the above strategies, you can empower your children to become responsible stewards of the wealth you've created. 

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