Leaving a legacy, in the financial planning world, is often linked to an inheritance. At Foundation Wealth Management, we believe the values, habits, and wisdom we pass often matter more than the dollars. Many wish we had learned a bit more about money earlier in life. With the wisdom you’ve gained over the years, we encourage you to share a bit with the next generation.
We believe you don’t need millions to make a difference. Young savers and investors can implement a few intentional steps today that can echo for generations.
Start with Stories — They’re More Powerful Than You Think
We all have financial wins and losses. Did you make some well-intentioned stock picks that didn’t pan out? Maybe you found yourself with a money pit vehicle at some point. On the flip side, you may be thankful you stuck with a piece of real estate even if it didn’t tick all the boxes of your dream home, but came with a modest monthly payment or low interest rate. We all have stories, sharing them can be a simple way to open the door to a thought-provoking money conversation.
Here are a two examples of how to weave your story into everyday conversation with youngsters:
- Grandchild receive their first paycheck?
- Tell them how much you made per hour at your first job, they may wind up being a bit more grateful for what they are earning.
- Or simply ask them if they have plans of stashing a bit away into a savings account and acknowledge a few things you think they may want to save for: vehicle expenses, Christmas gifts, college fund, even charitable giving.
- Child getting married?
- Getting on the same page about money right off the bat is advantageous for newlyweds. If you agree, you could share how you and your partner navigated combining your finances.
- Eliminating debt and sharing a story of how you were thankful for an emergency fund are other meaningful topics that just may help a new couple stay in the honeymoon phase a bit longer.
A mix of reality and encouragement can go a long way. Opening up about how you weren’t always perfect with money can quickly break down walls around money conversations. Let the young people in your life know you’re open to these conversations and want to be a source of encouragement and to answer questions.
Give Them a Head Start — Accounts That Build Wealth Early
Whether it is a child or grandchild, there are ways you can give a young loved one a head start in life. Here are few examples you may wish to utilize:
- Custodial brokerage accounts: A custodial brokerage account is an investment account that an adult opens and manages on behalf of a minor until the child reaches the “age of majority” which is 18 or 21, depending on the state. This can be an effective way to gift money with the added benefit of potential growth since the funds are invested.
- Roth IRAs for teens/young adults: A Roth IRA is a powerful retirement savings tool anyone with earned income is eligible to utilize. Contributions are made with after-tax dollars, so the money grows tax-free and can be withdrawn tax-free in retirement. Again, time is on their side when it comes to compounding, even modest annual contributions made in their teens or early 20’s can lead to substantial growth by retirement age.
- 529 plans for education. If your legacy goals include supporting education, a 529 plan is a tax-advantaged way to help. Contributions grow tax-free and withdrawals are tax-free when used for qualified education expenses. These plans can be opened by a parent or grandparent, and you remain in control of the funds even after the child turns 18. It’s a practical, meaningful way to lessen the future burden of student loans.
The key here is often to emphasize the impact of remaining consistent in prioritizing savings. Even small amounts can have a real impact — a lesson many learn too late.
Small Habits, Big Impact
By now you’re surely noticing the theme. Instilling the understanding of small habits, and consistency are great lessons to keep at the forefront of your money conversions with new savers.
For many who have found financial success, it often comes down to:
- Automatic saving transactions
- Limiting debt
- Living below your means, and
- Understanding compound interest
Your Impact Lasts Longer Than You Think
You may not be able to control how future generations manage their money, but you can influence their mindset, and that’s often the most powerful gift of all. By sharing the lessons you’ve learned, opening the kinds of accounts that build a financial foundation, and modeling thoughtful decision-making, you’re doing more than giving advice. You’re building a legacy.
Sometimes, it’s the smallest steps that leave the biggest mark. So, who in your life could benefit from one small step today?
About Foundation Wealth Management
Foundation Wealth Management is a CPA-led organization, that provides financial planning services and tax planning support; services and outcomes vary based on each client’s circumstances. Our team includes qualified professionals, such as CPAs and CFP®s, who are integral to our service offerings. Our team includes 3 Certified Financial Planners: Burt Hutchinson, CPA, CFP®, Paul LaViola, CFP®, and Stephen McDade, CFP®.
As Fee-Only planners, we are compensated directly by clients rather than through commissions from brokerage or insurance products, which we believe helps align our services with client goals.
Disclosure Statement:
This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax, or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice. All investments are subject to risk, including the possible loss of principal.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, Past performance is not a guarantee of future results.
