How To Build Generational Wealth For Your Family

Many people move to the UK to find jobs and build a future for their families.

With access to free education, free healthcare, and a large economy, there are plenty of ways to create wealth for your children, grandchildren, and your grandchildren’s grandchildren.

So how can you make the most of these opportunities? Find out how to start planning and saving for your children’s future in the UK.

What is generational wealth?

Building prosperity for your children and their children is known as generational wealth. It can also be called family or legacy wealth. The aim is to give future generations the best possible chance of financial success, so they can live in comfort and leave their children a legacy, too.

As well as money, generational wealth can also include assets like houses, stocks and shares, or even valuable commodities like gold.

Why is it important to prepare for your children’s future early?

It’s no secret that having wealthy parents gives people more opportunities in life. 48% of children with parents in the top wealth quartile have a degree by the age of 25, compared with just 4.9% of children with parents in the bottom wealth quartile.

Giving your children the chance to flourish as adults starts in your own pockets — and encourages the trend to cascade down into future generations. If your children are wealthy, their children will also have more opportunities.

This effect flows across entire communities. Building your own family wealth and sharing it with others can help build up your community, creating new opportunities, better representation, and a more prosperous future for everyone.

So how do you start building wealth in the UK?

How to build generational wealth in the UK

While there are lots of great things about living in the UK, there are lots of rules and regulations to understand when it comes to finance. This isn’t always easy to navigate, especially if English isn’t your first language.

Watch this space for lots of great resources that can help you navigate banking and savings spaces in the UK.

What investments can you make in your child’s future?

There are 5 main strategies you can use to invest in your children's future:

• Saving money
• Investing in stocks and shares
• Buying real estate
• Planning education
• Building a business

Let’s look at each of these options in more detail.

Saving money

This is the simplest strategy for building generational wealth. However, it’s not always easy to do in practice. As well as saving for yourself — money you can use for weddings, trips, and retirement — you also need to put money away for your children.

Putting your money in a trust fund or another safe space for your children is a good idea. It makes it easy for them to claim this money when they reach a certain age, or after you’re gone.

Investing in stocks and shares

Long-term investments are a very successful way to build wealth. While there are never any guarantees with investments, stocks and shares almost always increase in value over time. So by setting up an Individual Savings Account (ISA) or investing in stocks and shares through another means, you can grow your wealth over many years.

You don’t need to be a British citizen to set up an ISA in the UK — any UK resident can open one of these accounts. However, you do need to be prepared to play the long game. Investment markets fluctuate all the time, so you should commit to long-term investments to see the best returns.

Buying real estate

UK housing is expensive, and house prices are rising all the time. But if you can afford to buy, it’s one of the safest ways to invest in your child’s future.

Once your mortgage is paid off, you’ll own the house for life — meaning it can be passed down to future generations. Your family can then live in the house for as long as they like, or sell the house and use the equity for their own investments.

Education

All children deserve a good education. It gives them the tools, knowledge, and confidence they need to be successful in later life, whatever that means to them.

Investing in your children’s education — whether it’s private schooling, university, or on-the-job training — can pay dividends for future generations.

Building a business

Setting up your own business isn’t easy. It takes time, dedication, and a lot of understanding from the rest of your family, especially in the early days. However, once your business is up and running, it can create income for generations to come.

Estate planning and writing a will

Part of planning for the future is writing a will. Lots of people find this difficult, but it’s the best way to make sure your children reap the rewards of your generational wealth planning.

Making a will can help you manage how much inheritance tax you pay, preserving your money for your named beneficiaries. A will should state:

• Who your money and other assets will go to
• Who will look after your children if they’re under 18
• Who will execute the will (the person who should carry out the actions in your will following your death).

A will doesn’t need to be written by a lawyer, but there are some circumstances where it’s a good idea to get legal advice. This is often the case if you have children from more than one marriage, or you own property overseas.

You will also need to have your will signed by 2 witnesses, who must both be over 18 and not beneficiaries of the will.

The best ways to save money for your children’s future

Here’s what you can do to start building your own family wealth:

• Understand saving and investing — do some research into savings and investments to ensure you understand finance regulations in the UK. Speak to a financial planner or the Citizens’ Advice Bureau (many bureaus offer services in multiple languages, including Urdu, Pashto and Punjabi).
• Start early — however you plan to build wealth for your family, the sooner you start, the more you can save. Start saving or investing as soon as it’s financially viable for you to do so.
• Set up a children’s ISA or savings account — children’s accounts often have higher interest rates than adult accounts, and can be opened with just £1.
• Teach your children about money — passing financial knowledge down to your children can be just as valuable as passing down the money itself.
• Support your community — joining a money club allows you to save money while building wealth across your community.

Providing for grandchildren, great-grandchildren, and beyond

Educating yourself about money is the best way to begin. Visit our Learning Hub to find out more about wealth planning, and how you can help your family prosper for generations to come.