Preparing Kids for Generational Wealth Transfer

Did you know? Over the next 25 years, $68.4 trillion will transfer between generations in the U.S., marking the largest wealth transfer in history. Yet, 70% of family fortunes disappear by the second generation, and 90% by the third. Why? Lack of preparation and financial literacy.

Here’s how to ensure your kids are ready to preserve and grow inherited wealth:

• Teach financial basics early: Focus on saving, budgeting, and investing. Use tools like savings jars, budgeting exercises, and age-appropriate apps.
• Hands-on experience: Give allowances tied to chores, open kids’ bank accounts, and involve them in small financial decisions.
• Model smart money habits: Children often mimic how their parents manage money. Be open about family finances and involve them in planning.
• Use digital tools: Platforms like Maybe Finance simplify wealth tracking and management, helping families stay organized and transparent.
• Have open discussions: Talk about wealth, inheritance, and family values early to avoid conflicts and mismanagement later.

Quick Tip: Start financial education young. Studies show 70% of those who learn about money early feel confident managing it later in life.

Passing on wealth isn’t just about numbers - it’s about raising financially responsible heirs. Equip your kids to sustain wealth across generations with education, open communication, and the right tools.

Core Financial Literacy Skills for Children

Teaching kids about money isn't just about counting coins or dollars - it's about laying the groundwork for lifelong financial success. Three essential concepts - saving, budgeting, and investing - form the backbone of financial literacy. These skills are especially important when preparing children for future responsibilities, like managing inherited wealth, as they provide a solid framework for making smart money decisions.

Basic Concepts: Saving, Budgeting, and Investing

Saving is where it all begins. Kids need to see how money can grow when it’s set aside. A great way to teach this is by using something visual, like a clear jar, so they can watch their savings build up. When kids get money - whether from an allowance, gifts, or small jobs - encourage them to follow the "give, save, spend" method. This means dividing their money into three categories: giving to charity, saving for the future, and spending on things they want now. This simple system helps them learn balance and discipline with their finances.

Budgeting is another critical skill. It’s all about planning ahead. You can involve kids in everyday budgeting tasks, like creating a grocery list within a set budget. This is also a great chance to teach them about the difference between needs (like food) and wants (like snacks or toys). These real-life examples make the concept of budgeting feel practical and relatable.

Investing introduces the idea that money can grow over time. Use age-appropriate examples to explain how long-term thinking and compound growth work. Even simple stories or visuals can make this concept easier for kids to grasp.

Together, these skills create a strong foundation for financial learning. But the real magic happens when kids get hands-on experience.

Teaching Through Hands-On Experience

"Hands-on money experiences boost children's financial competence - to all kinds of financial outcomes we want them later in life",

• Ashley LeBaron-Black, BYU family life assistant professor.

One effective way to give kids practical experience is through an allowance system. Instead of handing out money with no strings attached, tie allowances to chores or responsibilities. This teaches kids the value of earning money. For instance, one child saved for four years, skipping small daily treats, to afford a pet they really wanted. This experience not only taught them patience but also the importance of prioritizing long-term goals.

Another valuable tool is opening a bank account for your child. Many banks offer accounts designed for kids, complete with low fees and educational tools. These accounts introduce concepts like deposits, interest, and tracking balances. It’s a great way to familiarize children with how financial institutions work.

For younger kids, like toddlers and preschoolers, start small. Piggy banks and simple cash transactions can help them understand the basics of saving and spending. Elementary-aged children can take on small budgeting tasks, like planning how to spend money earned from chores. By the time they’re teenagers, they can dive into more advanced topics like credit cards, basic investing, and even recognizing financial scams.

Showing Good Financial Habits

Kids don’t just learn from what you say - they learn from what you do. Modeling good financial habits is one of the most powerful ways to teach children about money. As Ashley LeBaron-Black points out:

"We find that young adults generally manage money much the way their parents managed money."

This means your own approach to saving, spending, and planning can have a lasting impact.

Being open about family finances is a great way to involve kids in real-world money decisions. For example, reviewing monthly bills or explaining why certain spending choices are made can help kids understand how financial planning works in everyday life. Regular family check-ins to discuss budgets, set savings goals, or plan for upcoming expenses can reinforce these lessons. Celebrate milestones, like reaching a savings goal or making a thoughtful purchase, to show the rewards of smart money management.

Finally, encourage curiosity. When kids ask questions about money - whether it’s about the price of groceries or why you’re saving for a specific expense - use these moments to teach. These everyday conversations are an easy way to build their financial knowledge and confidence over time.

Methods for Teaching Kids About Money

Teaching kids about money goes beyond just talking about it - it’s about giving them practical, interactive experiences. Combining fun activities with real-world applications helps kids develop financial skills in a way that feels engaging and meaningful. These methods also make it easier to introduce tools and strategies for tracking goals as they grow.

Hands-On Learning Activities

Kids learn best when they can roll up their sleeves and get involved. Giving them opportunities to handle money - spending, saving, and making decisions - helps them understand its value while building math and critical thinking skills.

Here are some engaging activities to try:

• Use clear jars labeled "Spend", "Save", and "Give" to visually demonstrate how money can be divided and allocated. For older kids, a 52-Week Saving Challenge (saving a set amount each week) is a great way to build consistent savings habits.

• Create a pretend store at home. Price items and give your child play money or coins to make purchases. This activity helps them practice counting, making change, and sticking to a budget.

• Take your child grocery shopping with a small budget. Encourage them to compare prices and decide what to buy within their limit - this teaches real-world decision-making.

• Organize a coin and dollar bill scavenger hunt around your home or yard. Let them find, count, and sort the money. It’s a fun way to teach the value of different coins and bills while reinforcing math skills.

Age-Appropriate Financial Tools and Resources

The tools you use should match your child’s age and understanding. Younger kids benefit from simple, engaging resources, while older kids can handle more advanced tools like apps and bank accounts.

For ages 3–7, picture books and games are great. Books like Alexander, Who Used to Be Rich Last Sunday by Judith Viorst and Lemonade in Winter: A Book About Two Kids Counting Money by Emily Jenkins introduce financial concepts in relatable ways. Monopoly Junior and the Buy It Right Shopping Game are excellent for teaching through play.

Digital resources can also be a big help. Sesame Workshop provides free bilingual tools to explain financial ideas, and ABCya offers interactive money games for kids from Pre-K to 6th grade. Podcasts like Million Bazillion by Marketplace are perfect for sparking conversations about money during car rides or downtime.

For parents looking for structured guidance, the FDIC’s Money Smart for Young People program offers free lesson plans, activities, and handouts to make teaching financial literacy easier.

Here’s a quick reference for tools by age group:

Age Group	Key Skills	Recommended Tools
3–5 years	Coin recognition, basic counting	Play money games, savings jars, picture books
6–8 years	Saving vs. spending	Board games, simple apps, DIY piggy banks
9–11 years	Goal setting, wants vs. needs	Savings challenges, shopping comparisons, podcasts
12–14 years	Budgeting, earning money	Bank accounts, budgeting apps, real-life practice
15–18 years	Advanced planning, credit basics	Financial planning tools, investment simulators

Goal Setting and Tracking

Once kids have hands-on experience, it’s time to focus on setting and tracking financial goals. This step teaches them how to plan and stay disciplined with their money.

Encourage kids to set specific, achievable goals. For instance, instead of saying, "I want to save money", they could aim for something like, "I want to save $50 for a new LEGO set." Clear goals give kids a sense of purpose and make progress easier to measure.

Visual trackers can make this process exciting. Younger kids might enjoy coloring in a thermometer-style chart on the fridge, while older kids could use an app to monitor their savings. Celebrating milestones - like reaching 25%, 50%, or 75% of their goal - keeps them motivated and reinforces the value of saving.

Regular check-ins are key. Use these moments to review progress, discuss challenges, and adjust goals if needed. These conversations also provide a chance to talk about unexpected expenses or shifting priorities.

For families managing more complex finances, digital tools like Maybe Finance can help parents model good financial habits. When kids see their parents actively managing money, it reinforces the importance of planning and tracking.

Start with short-term goals that can be achieved in weeks or months. As kids grow, introduce longer-term goals - like saving for a car or college - to help them build the patience and discipline needed for bigger financial decisions down the road.

Building a Multi-Generational Financial Plan

Planning for multi-generational wealth isn't just about numbers - it's about fostering open communication, documenting your plans clearly, and using the right tools. With the largest wealth transfer in history underway, families need to prepare the next generation for the responsibilities that come with managing and preserving wealth.

Family Discussions on Wealth and Inheritance

Talking about wealth and inheritance can feel awkward, but these conversations are crucial. The trick is to make them age-appropriate and grounded in your family's values. Start by discussing what wealth means to your family before diving into the specifics. For instance, when a child asks, "Are we rich?" use it as a chance to explain not just financial wealth but also the responsibilities it brings.

Chris McDermott, Chief Operating Officer at Fidelity Private Wealth Management Group, highlights the importance of ongoing conversations:

"It helps to have a conversation over a longer period of time, and make sure that those children understand - in a more explicit way - what your expectations are."

Sometimes, bringing in a third-party expert like a financial counselor or family wealth advisor can help ease these discussions. They can act as neutral facilitators, ensuring everyone feels comfortable expressing their views and asking questions.

Transparency is key when it comes to estate planning. Share the reasoning behind your decisions and clarify your expectations for each family member. This openness can help avoid misunderstandings and prevent conflicts later. Interestingly, studies show that adult children often underestimate their parents' estate value by over $300,000, which underscores the importance of clear and honest communication.

Recording Assets and Setting Guidelines

Having the right conversations is just the first step - documenting everything clearly is equally important. Start by creating a detailed inventory of all your assets, including their values, locations, and ownership details. Think of this personal balance sheet as the backbone of your financial plan.

Organize your documents into categories like estate plans, insurance policies, and investment records. Store these in a secure place, such as a fireproof safe or locked filing cabinet, and back them up digitally using cloud storage or a flash drive.

Key documents to include are your will or trust, powers of attorney, living will, beneficiary designations, financial statements, real estate deeds, retirement account information, and life insurance policies. Don’t forget about digital assets like online account passwords, subscriptions, and even pet care instructions.

Regularly review and update your beneficiary designations to ensure they align with your overall goals. Make it a habit to revisit these documents annually or after major life events like marriages, divorces, births, or deaths.

Adding a letter of instruction can provide personal insights into your wishes and family legacy. This can help your children better understand your financial journey and the values that guide it.

Using Digital Tools for Financial Planning

Digital platforms can make managing family wealth much easier. These tools not only bring transparency but also simplify complex financial tasks, saving time and improving accuracy. For families with substantial wealth, these tools can save up to 40 hours of administrative work per month for every $100 million in net worth.

Chelsea Smith, Senior National Director of Family Office Advisory Services at Bernstein Private Wealth Management, explains:

"Digitalisation is the glue that holds multi-generation wealth together. Family offices will struggle to survive - let alone thrive - without it."

Platforms like Maybe Finance offer solutions tailored for multi-generational financial planning. They allow families to link accounts from over 10,000 institutions, use AI-driven insights, and manage assets across currencies - perfect for families with international holdings.

When choosing a platform, look for features like real-time reporting, customizable dashboards, and secure data encryption. It's also helpful to pick tools that let you assign different access levels, so younger family members can gradually take on more responsibility as they grow.

Mary Timmons, Chief Operating Officer of Northern Trust’s global family and private investment offices group, emphasizes:

"The ability to report on asset holdings and values accurately, and to customise this reporting for different stakeholders, is of substantial importance."

The reality is that 70% of families lose their wealth within two generations, and by the third generation, that figure jumps to 90%. Digital tools can help reverse this trend by improving oversight, fostering education, and encouraging communication across generations. They also make it easier to involve children in financial discussions by providing clear visuals of the family’s financial health and progress toward goals.

Before committing to a digital platform, assess your family's needs and ensure everyone is trained to use the tools effectively. The goal is to simplify wealth management and prepare future generations, not to complicate the process. With the right tools, you can create a system that not only supports current financial management but also empowers the next generation to carry the legacy forward.

Conclusion: Preparing the Next Generation for Financial Success

The possibility of wealth fading over generations is a real concern. But it doesn’t have to be the norm. Families that prioritize financial education and take intentional steps to prepare their children can break this cycle and establish lasting wealth that spans generations.

The secret? Start early and make financial literacy a family focus. Studies indicate that 70% of individuals who receive financial education in their youth feel confident managing money, compared to those who only begin learning when inheritance is on the horizon. Without this early foundation, financial missteps often follow.

"Financial literacy isn't just about numbers; it's about values. Teaching the next generation to manage money responsibly ensures that they're not only prepared to handle wealth but also equipped to make a meaningful impact on the world." – Granite Harbor Advisors

Parents who actively engage in their children’s financial education set them up for success. Teaching the basics - like budgeting, investing, and managing debt - early on helps young people develop habits that often lead to lower debt, higher savings, and better credit as adults. This foundation also makes it easier for them to embrace digital tools that simplify wealth management.

However, many families find it challenging to navigate the practical aspects of wealth transfer. Surveys show that, while most investors worry about transferring wealth, few actually discuss their plans with their heirs.

"Inheritors who are more financially savvy are better positioned to be successful with protecting and preserving that wealth. They understand the value of continuing the dialogue around financial literacy with children, grandchildren, and other beneficiaries." – Liz Jacovino, RBC Wealth Management–U.S. Wealth Strategist

Overcoming these challenges starts with open, early conversations and leveraging modern technology. Digital platforms, such as Maybe Finance, are game changers in multi-generational planning. These tools allow families to track assets across various accounts and currencies, while AI-powered insights simplify complex financial concepts. By promoting transparency and accountability, these platforms make wealth management more accessible for younger generations. In a world where formal financial education is limited, families must take the lead.

Passing on wealth successfully isn’t just about holding onto money - it’s about raising financially capable heirs who understand both the opportunities and responsibilities that come with it. By combining early education, open family conversations, and cutting-edge tools, families can join the small percentage - just 10% - who manage to pass their wealth on to future generations effectively.

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