Investing is great – over time you’ll sort out your retirement. With what you have left, there may even be a little something to leave the kids.

That perspective is 100% valid, but for some, they in search of something bigger, something with purpose. This is where setting in motion a strategy of building intergenerational wealth comes in.

According to this article quoting the Williams Group Study, which observed 3,250 families over 25 years, 70% of family wealth was lost by the second generation and 90% by the third generation.

Yikes! It appears that dying rich and leaving it up to the kids to figure out may not be the most efficient strategy?

Recently, this is something I’ve been taking a lot more seriously with some of my clients, and with my own family too. In order to build wealth beyond just my life, I need to prepare the vessel, more than I need to fill it up. I need to teach my kids and prepare them the best I can, so no matter what happens, they’ll be a success.

Preparing Children for a Different Future

To prepare our own children for wealth in an uncertain future, I focus on three key areas: work, morality, and knowledge.

Work Before Play

Before any fun, our children engage in focused, often physical work, each an every Saturday – it’s no big deal, it’s just what we do. Tasks like folding laundry, cooking, cleaning, and home maintenance, are all done to teach them that effort results in reward. What’s more, I want them to feel good (in control, and not guilty) about how they choose to spend.

Morality

In a world where wealth may increasingly concentrate in fewer hands, I want to instill strong moral values. Exposing kids to regular religious attendance may be a good anchor in an uncertain world, be a good way to ensure a positive family culture, and increase the odds they’ll earn more money, as per this research, it may be good for their wealth, too. Religious attendance has been associated with increased household income, decreased welfare participation, and higher levels of psychosocial well-being.

Knowledge and Skills

Instead of focusing solely on academic knowledge, we teach our children practical skills that may remain valuable in an AI-driven world. These could include:

– Operating machinery (e.g., tractors, ride-on lawnmowers)
– Home maintenance skills (painting, pressure washing)
– Cooking and household management
– Negotiation and conversation skills

Check out the full episode here.

Teaching Children About Money

Educating children about money is essential for preserving intergenerational wealth. You can’t expect children to make good financial decisions, if they don’t respect the raw material of wealth- money. Here are some effective methods to teach kids about money that we’ve used:

1. Allowance System: Provide a monthly allowance in the form of physical cash, teaching children to allocate money into different jars for spending, saving, investing, and charity.

2. Entrepreneurship: Encourage self-employment initiatives, such as starting a lawn mowing business or selling homemade products.

3. Open Discussions: Talk openly about money, investments, and financial challenges to build confidence and create a pathway to communicate with your kids in the future through.

Defining Purpose in Wealth Pursuit

Is this about getting rich, or about helping kids to understand  wealth serves a larger purpose beyond personal gain? Of of the tasks for our family this year is to create a family wealth charter that articulates our family’s purpose, goals, and strategies for building and transferring wealth across generations.

By focusing on these areas, I think we can better prepare their children to manage and grow intergenerational wealth. This makes the world better for our future family and can make the country happier too. Some will chase a political solution I’m sure, but increasing the odds that future wealth can grow, starts when they’re young.