Aug 15, 2023  | Tags: family, Inheritance, wealth

Our insights

As parents, we have an obligation to educate our children.

These teachings may include moral values such as honesty, accountability and respect.

They are likely to include practicalities like reading, cooking and swimming, playing sport and that awkward chat about the birds and the bees.

But a family’s attitude and ingrained culture towards building wealth and working hard should be its greatest legacy.

These are lessons which, when taught at a young age, can shape futures and have an everlasting influence on a person’s chances of a prosperous life.

Whether a family is worth billions or plies its trade in the working class striving to pay off a mortgage against the backdrop of rising interest rates, the same basic principles of wealth accumulation apply.

A family that observes these principles is more likely to successfully create, manage and transfer wealth down through its generations.

Education and knowledge

Educating your heirs on money matters should be considered every bit as important as any of life’s lessons.

No family would want to see its wealth frittered away by a generation of spendthrifts.

Teaching children about saving, compound interest, budgeting, investing, debt management and the value of a dollar from an early age gives them an invaluable grounding for the years to come.

It is more likely to produce financially responsible adults rather than ones who spend today with no regard for tomorrow.

But education and knowledge shouldn’t just be considered for the young.

Soliciting advice and working with qualified financial professionals who help manage investments and monitor new opportunities should be the building blocks of every family’s wealth creation plan.

Work ethic

A strong work ethic is an admirable trait in any family and one which is taught by example.

Even subconsciously, it motivates family members to strive to achieve their own success.

But wealth accumulation isn’t always about a work ethic that demands blood, sweat and tears.

American industrial engineer Allen F. Morgenstern said nearly a century ago, “work smarter, not harder” and that is certainly applicable when it comes to money.

Saving and spending habits

Children also learn these traits by example.

A family that underlines the importance of saving for the future is more likely to build considerable wealth.

Children of parents who give greater consideration to purchases before buying rather than acting impulsively are more likely to appreciate, value and reproduce that behaviour.

Attitude towards debt

Living within your means and not being consumed with debt is another invaluable pearl of wisdom, regardless of the number of zeros in a family’s income.

Reducing high-interest debt should always be the first priority in any financial plan because it frees up capital for investing and accumulating wealth rather than draining it.

Families conscious about minimising their debt avoid circumstances where they over borrow, potentially putting their wealth in jeopardy. 

Investment strategies

The success of most wealth creation plans rely on diversity, including superannuation, other shares, property, commodities and more.

Family history and culture has a big  influence on the selection and method of those investment strategies through its generations.

Financial communication

Open and frank discussions are the best ways to share and improve financial literacy and knowledge in a family.

That’s why sharing and considering investment strategies with experienced family members is important at any age.

It is likely to lead to more successful outcomes and the avoidance of potentially costly mistakes.

Entrepreneurial spirit

Families may differ widely on their encouragement of entrepreneurship and risk-taking to create wealth, based largely on their family’s history of success or failure.

The importance of the lesson is passing on the understanding of good and bad risk-taking and financial management to maximise the chances of prosperity.

Successful families may already have established businesses for their children to work in but some may still prefer to prove themselves outside the family bubble.

Protecting family wealth

How a family chooses to use and guard its wealth is also ingrained into its culture.

Some like to seek philanthropic opportunities while others prefer to fiercely guard and protect their wealth.

This may extend to mechanisms designed to keep that wealth from slipping into the clutches of others including untrusted partners within the family or associates.

Families can also establish trusts to prevent younger heirs from accessing inheritances before reaching a certain age and maturity.

What family culture are you part of, or creating?

Some people face the challenge of breaking generational poverty and other challenges and mindsets that have been passed down family lines.

The task of shifting this may seem overwhelming.

So where do you start?

Review and reflect.

Identify the traits, good and bad, that influence you and your family regarding money and wealth.

Then create a vision for a new family culture and approach to wealth - dream about your future, and the future of your kids and grandchildren.

Then talk to your financial adviser about what it would take to bridge the gap between where you’re at, and where you want to get to.

It is important to note though that it’s not just about the money - you’re also faced with the task of shifting mindsets and thinking differently about wealth.

Remember, no family has the perfect approach and these big changes don’t happen overnight, but the sooner you start, the sooner you’ll see the benefits.

Get advice today

Family culture plays a massive role in the financial responsibility, education and success of its next and future generations.

Much of that success can be attributed to working with an experienced financial adviser.

They can not only build your family’s wealth but ensure you guard against making expensive mistakes that can see years of hard work evaporate in the blink of an eye.

That’s where Calder Wealth Management can assist.

CWM are financial experts who can help you make the best financial decisions for your family now and going forward.

We’ll work with you to devise investment strategies whatever your family’s financial goals.

No family should  go without quality financial advice from a team personally invested in its wealth accumulation.

At CWM, we pride ourselves on leading our clients into the future with structure, financial stability and confidence. 

Contact us today to discuss all of your financial needs and concerns.

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.