Today, I’d like to explore what generational wealth is and how to build it for your family. Does wealth exist beyond financials? Yes, I believe it does as I’ll share steps my family has taken in educating our boys on various forms of wealth.

What is generational wealth? You might imagine the fictitious Roy family from the series Succession as a vivid example. It’s funny how our brains automatically think in terms of materialism and money when we define wealth. I believe there is a better way to think of wealth, but it takes practice. By thinking and acting with intention, wealth can accumulate in terms of your time, health, family, and friends.

One of my favorite books from earlier this year does a fantastic job of outlining what true wealth may look like. The 5 Types of Wealth; A Transformative Guide to Design your Dream Life by Sahil Bloom describes wealth that goes beyond the numbers. Segmented into five categories including:

• Time Wealth
• Social Wealth
• Mental Wealth
• Physical Wealth
• Financial Wealth

I’ve spent close to three decades counseling families and managing their wealth. We’ve navigated the emotional ups and downs through all market cycles together. Ultimately, clients achieve happiness when they focus on what they want, tune out distractions, and channel their energy towards the inputs they control. Seeking a range of “enough” wealth is a better goal than chasing a number. This helps families define affluence on their terms, not mine.

As these conversations have evolved over the years, today’s financial wealth is less important than the other definitions. Most cherish health, wellness, and spending time with friends and family. Yet why does financial wealth demand so much attention? Cash reserves, portfolios, and cashflow do decide where we live, how much we spend, and what our next vacation may look like. But isn’t there so much more to living than this?

There is and this quieter side of wealth deserves more attention. Intangible benefits that won’t show up on your balance sheet include:

• Spending time with family and friends
• Swimming, biking, running, lifting, climbing for mobility and strength
• Quiet time to reflect on what’s working (and not)
• Reading and journaling for continued learning
• Controlling your calendar and being where you want to be
• Resilience and the ability to bounce back from setbacks
• Sharing knowledge and ideas through mentorship and leadership

Financial wealth will contract and expand often without notice or explanation. It’s rewarding to know your time, health, and relationships aren’t as volatile. Sure, things here will zig and zag too, but long term this prosperity is so much more important than what’s in your accounts. It’s really about the quality of your time and who you spend it with.

Teaching this softer side of wealth to your children starts at a young age. Often it focuses more on the financial side as kids tend to learn best with money in their hands. Over time, maturity allows real conversations to take place. Ideas and stories will help shape how your children of all ages view wealth.

Social media and our messaging as parents aren’t always on the same page. I think it’s best to keep communication about life (and money) open ended. With that in mind, here’s what working for my family as we expand our definition of wealth.

Ages 5-13

• Pay an allowance to your children. Put money in their hands with no strings attached. No chores, just cash that allows kids to spend, save, and give where they want. At some point when our children got older, we replaced cash with electronic bank deposits as spending moved to their debit card. The message was the same, it’s your dollars and your choices.

Ages 15-18

• Source a job that will pay you for your time. Learning early on what your time is worth and what an employer will pay you is priceless. Allowances stop as part-time work begins. Real money shows up, now what? How long will money from that summer job really stretch?
• Create an investment account with your child, and match whatever they choose to invest into their account. Talk to them about investments or ask your financial planner to provide helpful resources. Parental matching is the single best decision to encourage kids to think about how much do they need today versus how much they can defer for tomorrow. Finance is all about behavior; learning this at an early age is key.
• Co-sign a credit card when they turn 18 to build their credit history. Explain how to use it and set up their preferences so they pay off the monthly balance from their own account in full each month. Encourage debit card use for day-to-day purchases.

Age 18+

• Your children are in college, figuring out life and how to take care of themselves. Hopefully, they spend time exploring physical wealth through intramural or club sports, and by walking and biking to classes. They are learning to say yes to new adventures and learn more about who they are and what they want from life. Finding your tribe is important as relationships matter with social wealth. Life is so much more enjoyable with friends to laugh with.
• Managing time in the library, group projects, and working with others, helps young adults expand their time wealth. After all, there are only so many hours in the day. Spending through college raises awareness of how far dollars can go.

Post graduation

• After landing a full-time job, young adults should manage cash reserves and hold back the right amount for emergencies in a separate account. Create a different active savings account that accepts withdrawals and deposits for trips and friend’s weddings. Debit card usage is still the best but it’s good to lean on that credit card when necessary for a big-ticket purchase. Continue paying off the credit card balance in full each month.
• Remain flexible, patient, and keep learning by reading and asking mentors for feedback. As cash flow improves automate investing into your 401(k) with an employer match. Continue adding to your after-tax investment account and check your cash reserves periodically. Spend the rest as you wish, you earned it and are working hard!
• Before it’s necessary, find a financial advisor friend you can trust and talk with about your goals, timelines, and what you want. It’s not too early to create a plan and revisit it once a year.
• Social, mental, and physical wealth is important to reflect on as you go about your day. Staying active is a great work out for your body and brain to stay in sync. Don’t let this slip this early in your career.

There’s no right or wrong way to teach your children about the different forms of wealth. It starts with a conversation and who knows where it may lead.

Thanks for reading and enjoy your Thanksgiving with friends and family!