Intergenerational Wealth: Teaching Kids to Preserve and Grow It

Fatima Qureshi
Jul 12
3 min read

Creating wealth is only part of the journey—sustaining it across generations is the real legacy. History shows that wealth often disappears within two or three generations due to poor financial habits, lack of guidance, or insufficient planning. Teaching children not just to inherit wealth, but to understand, respect, and grow it, is one of the most powerful gifts a parent or grandparent can offer.

1. What Is Intergenerational Wealth?

Intergenerational wealth refers to assets—financial or otherwise—passed down from one generation to the next. These may include:

Real estate
Business ownership
Investment portfolios (mutual funds, stocks, SGBs)
Insurance payouts or annuities
Trust funds or legacy funds

But: If your children don’t know how to handle money, this wealth can shrink rapidly.

2. Why Families Lose Wealth Over Generations

Studies (like the Williams Group Wealth Study) show 70% of wealthy families lose their wealth by the second generation, and 90% by the third. Common causes include:

Lack of financial education
No clear communication or planning
Poor decision-making by heirs
Absence of family governance or trust structure

3. Core Skills to Teach Children and Teens

Ages 6–12: Basic Money Habits

Saving before spending
Understanding needs vs. wants
Earning through chores or mini-tasks
Introducing the concept of interest through piggy banks or junior savings accounts

Ages 13–18: Responsibility and Budgeting

Tracking expenses with apps
Creating small budgets (e.g., school supplies, clothes)
Explaining inflation and compounding with simple examples
Letting them make (and learn from) small financial mistakes

Ages 18–25: Investing and Financial Independence

Open a demat or mutual fund account (under guidance)
Discuss asset classes, SIPs, and emergency funds
Talk about taxes and how to file returns
Share family financial goals and investment philosophy

4. Make Wealth a Conversation, Not a Secret

In many families, money is taboo. Break this cycle:

Host annual “money conversations” or “family finance meetings”
Share how you built your wealth and the mistakes you made
Involve your kids in small financial decisions (e.g., planning a family vacation budget)
Teach them the values behind the wealth—charity, prudence, purpose

5. Practical Tools to Preserve and Grow Wealth

Tool	Purpose
Will & Estate Planning	Ensure assets are distributed as intended
Trusts	Protect minor children or dependent heirs
Mutual Fund Nominations	Simplify asset transfer
Insurance	Replace income in case of sudden demise
Investment Education	Teach asset allocation, SIPs, risk management

6. Build a Family Financial Legacy System

Create a Family Investment Charter(rules for investment use, withdrawals, priorities)
Consider setting up a legacy fund or intergenerational trust(e.g., corpus for education, marriage, or charity)
Encourage entrepreneurship: Seed fund small business ideas for your children
Promote philanthropy: Create giving funds they can manage or contribute to

7. Lead by Example

Children learn more from observation than instruction. Let them see you:

Save before spending
Invest consistently
Avoid debt traps
Donate regularly
Talk openly about goals and trade-offs

Conclusion

Passing down wealth without wisdom is a missed opportunity. By nurturing financial skills, values, and habits in your children, you ensure that your legacy lasts—not just in rupees and properties, but in empowered decision-making. Intergenerational wealth isn't just what you leave for them; it’s what you leave in them.