What to Do Today to Build Generational Wealth and Leave an Inheritance in the Future

If the desire to set up the next generation for financial success comes naturally to you, you’re not alone. In fact, 86 percent of Black Americans say leaving an inheritance is either their “single most important financial goal” or “very important,” according to Northwestern Mutual’s 2024 Planning & Progress Study.

It’s never too early to start preparing your finances—and your mindset—to ensure your loved ones benefit from your hard work after you pass away. Your efforts now can help provide the resources for your heirs to pursue their dreams and solidify their finances in ways that you may not have experienced.

Whether you’re the first to save for the next generation or your family has a long history of passing down resources, here’s what you can do today to prepare for the future:

1. Look for opportunities to increase your income. Consider a side hustle, new business, higher-paying job or other means to increase your earnings. The more money you earn (and save or invest), the more you can leave for your children when the time comes.

2. Start saving. If you’re not doing so already, set aside money each month—no matter how small the amount!—in a savings account that’s separate from your everyday finances. You can set up automatic withdrawals to a high-yield savings account, so your money grows faster on autopilot.
3. Save for retirement. Have you heard the saying “You can’t pour from an empty cup”? The same concept applies here. If you reach retirement age and don’t have enough to live on, you won’t be able to leave as much to your children. Start by contributing to a 401(k) or other retirement account. The goal is to save enough for retirement so you don’t have to tap into what you were planning to leave for your children’s inheritance.
4. Create a will. You can establish a will even if you’re in your 20s and haven’t earned a lot of money yet. A will simply clarifies how you want your money, property and other assets distributed after you pass away. Craft a will based on your current financial situation but make sure to update it over your lifetime as your circumstances change.
5. Name a guardian and conservator. We never know what life has in store for us, so we must prepare for the unthinkable. It’s important to name a guardian you trust to care for your children and a conservator, or guardian of the estate, who will manage their financial assets if you pass away suddenly. Identifying this person (or people) and putting it in writing is crucial to ensuring your children are protected in your absence.
6. Explore life insurance policies. Life insurance can be more than a source of cash to cover your funeral expenses. The death benefit can give you peace of mind knowing that those you love won’t have to struggle when you pass away. It may create a financial lifeline for them, providing support so they may be able to keep the family home or help pay for a mortgage down payment, college education, medical bills or other goals. Depending on the type of policy and policy terms, life insurance can build cash value over time that can be used while living. For example, the cash value can help with an emergency, fund kids’ education or be used as income in retirement.
7. Talk to your children about money. No matter their age, you can teach your children how to build a good relationship with money. That way, they will be better stewards when you pass your assets to them later in life. Teach toddlers how to count money and advise older kids on how to save and spend wisely.
8. Consider leaving assets in addition to money. While cash provides flexibility, your kids may find other possessions valuable as well. Consider properties, cars and even jewelry or family heirlooms. These items may carry sentimental as well as financial value for your children. Remember, even the smallest inheritance can go a long way toward demonstrating that you care about your loved ones.
9. Talk to a trusted financial advisor. Even though the tasks above may seem relatively simple, getting started can feel daunting, especially if you’re the first in your family to leave an inheritance. Connect with a financial advisor to discuss your goals and create a plan that makes sense for your situation. Together, you can take care of the next generation today.

Tax disclosure: This article is not intended as legal or tax advice. Northwestern Mutual and its financial representatives do not give legal or tax advice. Taxpayers should seek advice regarding their particular circumstances from an independent legal, accounting or tax adviser.