Building a Legacy – How to Teach Financial Literacy to the Next Generation
Teaching financial literacy is vital to leaving a legacy for generations to come. Legacies aren’t just about the wealth you pass on, they’re also about the wisdom you leave behind. Financial literacy is among the most valuable gifts you can give your children or grandchildren. It helps future generations make informed decisions, avoid costly mistakes, and preserve what you’ve built. But where do you begin?
Starting Financial Education Early: Age-Appropriate Lessons
Young Children (3-10 years old)
When children are 3 to 10 years old, it is a good time to start teaching them basic money concepts, such as saving, spending, and giving. Use tools like piggy banks, chore charts, and simple games to help teach children these lessons about saving and basic transactions.
Tweens and Teens
At this stage in life, it might be time to encourage children to start working part-time to earn their own money. As they earn income, you can introduce concepts like budgeting, compound interest, credit basics, and goal setting.
This is also a good time to open savings accounts or custodial investment accounts and encourage children to manage the money they have made.
Young Adults
As children become young adults, it is appropriate to have conversations about credit scores, debt management, investing, and taxes. At this stage of life, real-world financial decisions -- like buying a car or managing rent – are introduced. It is important that young adults have the guidance they need as they learn to make sound decisions.
Lead by Example
One of the easiest ways to teach financial literacy to the next generation is to lead by example. Share your own financial principles, goals, and habits. Involve family members in charitable giving decisions or budget discussions. It is important to be open about financial successes and lessons you have learned from your experience to introduce realism. Involve your family in conversations with your financial advisor.
Incorporate Wealth Conversations into Family Life
Talk with your children about the family’s wealth management. Making sure everyone is part of discussions about travel, business ventures, and philanthropy will result in familiarity with these concepts as children get older. Scheduling “family meetings” to discuss estate plans or trusts, in an age-appropriate manner, can leave family members feeling better prepared and thus reduce uncertainty in the future.
Encourage Stewardship Through Giving and Purpose
Use philanthropy to teach values. You can accomplish this by matching their donations or creating a “giving challenge” that speaks to their passions. Create interest by talking about aligning money with values, whether it’s through philanthropy, investing or career choices.
The Best Inheritance is Financial Confidence
Leaving a genuine legacy means combining wealth with wisdom. Financial literacy enables the next generation to build upon what you have worked hard to create. Contact your financial advisor to talk about how best to make education and stewardship part of your broader legacy plan.
The material has been gathered from sources believed to be reliable, however West Michigan Advisors cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through West Michigan Advisors. Advisory services are only offered where West Michigan Advisors and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. Securities offered through Level Four Financial, LLC, a registered broker dealer and Member of FINRA/SIPC