70% of well-off families lose their wealth by the next generation, and only 10% maintain the wealth beyond that. I believe the key to generational wealth is to not only pass on financial assets, but combining it with knowledge of good financial habits and the gift of education. Here are three steps towards generational wealth that you can take right now.
1. Set up an investment account
If you have children, consider opening an investment account for them as early as possible. We know that time is our best resource in wealth building, and the earlier you start, the less you have to invest to reach your goal. You can read about why you might want to get rich slow here.
If you start when your child is born, even £10/month could build up to over £7,500 by the time your child is 20 years old. If you start at age 10, the same monthly amount could grow to about £2,000. Children have more time, which is why it's so powerful to set up an investment account for them in childhood. Even small, consistent investments will give them such a head start in early adulthood, for education, travelling, their first house, or something completely different!
If you want to start investing, for yourself or your children, but don’t know where to start - the Get Invested Bundle is perfect for you. This mini-course walks you through the steps to get set up, and to succeed in the long-term.
2.Pass on healthy financial habits
This might be the most important thing you can do. Without a healthy relationship with money and an idea of what good financial habits looks like, no amount of money will help them in the long run.
Remember that you are a role model. Your child is picking up on your behaviour and language around money. Research is implying that our relationship with money is set at age 7, so be mindful of how you act and speak about money even in front of small children. Helping older children save for a goal and managing their allowances is a great way to let them experience the achievement it is to reach financial goals. Lastly, show that you and your partner (or other adults) can speak about money in a positive way, and that money is not a taboo or scary topic that should be avoided.
3. Invest in your child's education
Supporting your child with education is one of the greatest gifts you can give them. A degree is undeniably an advantage in a lot of careers, which makes this a great way to help your child(ren) to provide a way for them to provide for themselves as adults.
Lots of things in life will come and go, but anyone who has an education will have that forever. Helping your little ones to graduate either debt free, or with less student debt, will give them a brighter future without the pressure of a big student loan. Remember that investing in your child’s education can also look like taking your time to help with homework, providing a tutor when needed, and/or enhancing their learning through interesting trips or activities.