Wealth Insights

Raising Well-Grounded Children While Transferring Wealth Through Generations

By Hightower Advisors / March 11, 2024

Statistically, familial wealth depletes as generations are added to a family tree. This often occurs when parents and grandparents don’t communicate with their children about money, where it should be spent, and how to maintain the family’s goals and values as time progresses. But as new generations are born, they are faced with different challenges and fears on a personal, financial, and societal scale that can affect their ability to stay grounded and maintain the family’s wealth. As a result, the older generations in wealthy families are responsible for helping develop their children’s interpersonal and intrapersonal skills while also instilling values that promote their financial well-being.

But how can families go about tackling this? We spoke with Andrew Pearson, who guides families in maintaining their generational wealth by working with each family member, across each generation, to unearth their values, goals, and dreams and implement a plan for the future of the family’s wealth. Throughout this discussion, we uncovered four key strategies for families to ensure their children can build upon the foundation that previous generations have created.

Four Steps to Sustaining Wealth Across Generations

Establish Family Values: Families should come together and write a preamble that defines their values as they can influence a child’s behaviors and how they interact with the world. Our values are the core of who we are as people and by forming them, families can better understand each other’s mindsets.
Communicate with Your Children: Encouraging open communication with your children is one of the biggest components of generating trust with one another. By fostering transparent communication, parents can listen to their children’s thoughts, feelings, and emotions about their past, present, and future.
Promote A Strong Work Ethic: We all are motivated by different things so parents can’t expect a one-size-fits-all model when teaching good work ethics to each of their children. Leading by example is a great way for children to pick up on how responsibilities and tasks should be handled. Another great way to help them develop a strong work ethic is by setting clear expectations that involve consequences if not met.
Teaching Them the Value of a Dollar: Parents are their children’s first teachers concerning financial literacy. Conversations about money with your children can begin as young as five years old, starting with what money is, how it is earned, how to save and invest, and how they can be charitable and give back. In return, the financial world will become clearer to children through these conversations.

To learn more about this topic, watch the replay of our conversation with Andrew Pearson.

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