Establishing a Foundation for Financial Literacy Among Next-Generation Family Members

By Rachel Gil

Stewardship is the idea of taking care of what has been entrusted to you. When it comes to wealth, stewardship is more than simply spending money appropriately or saving it. It entails understanding core financial literacy concepts so that you are well positioned to ask the right questions and make decisions that will positively impact your future, as well as your family’s. In other words — financial literacy is key to owning your future. Unfortunately, this is not something that is commonly taught in schools. Therefore, people are often left to figure things out for themselves when it comes to setting up a budget, managing a credit card, and making investments, for example. To complicate matters, parents and other trusted family advisors might assume that because a young adult has a degree from a top university that he or she automatically knows the ins and outs of personal finance. These same young adults might also believe they should have already mastered personal finance and be too embarrassed to ask about critical concepts.

If you feel overwhelmed by the lingo and “alphabet soup” of managing money—ETFs, APR, EPS, and the like — you’re not alone! There are steps you can take to get comfortable with the concepts and feel empowered as a financial steward.

  1. Cover the basics. To get started, I recommend finding a resource that provides a high-level overview of critical topics, including budgeting, credit, investing, saving for retirement, and taxes. “Get a Financial Life” by Beth Kobliner or Cresset’s recorded webinars on these topics are great ways to dip your toe into personal finance. Getting exposure to a wide range of topics will also help you decide on areas that are most interesting and meaningful to you.
  2. Make it relevant and dig in. Learning French is great, but you’ll probably forget a lot of what you learn unless you speak it regularly. The same can be said for financial concepts: learning is most impactful when you put it to use. Think about upcoming events in your life: Are you thinking about starting a new career? Planning to get married soon? Saving to buy a home? Once you have an event in mind, consider what financial knowledge might be helpful to achieve it. Know how to negotiate the right starting salary. Understand how to manage a budget. Learn about credit scores and the mortgage process. Dive into one focus area that is relevant and work toward your upcoming milestone. Here are a few websites that can be helpful for topic-specific learning:
    1. Budgeting: NerdWallet
    2. Investments: Investopedia
    3. Credit: NerdWallet
    4. Taxes & retirement planning: The Balance
    5. Trusts & estates: Investopedia
  3. Find a financial mentor. Whether it’s a parent, friend, or trusted advisor, having someone who is sophisticated in personal finance who you can go to with questions is key. Self-led learning via books or online resources is a great way to get started, but actually talking about finances with someone you trust can really build your confidence. Your mentor may also be able to offer some accountability as you set goals for yourself and work toward milestones.
  4. Get clear on your values and money behaviors. From what we prioritize in relationships, to what we choose to invest in, values lead many of our decisions. Spend some time thinking about what drives you and how these values show up in your day-to-day life. Similarly, reflecting on your money behaviors can be eye opening: do you like to save or are you a big spender? Do you enjoy talking about money or would you prefer to ignore it? Having awareness of our values and behaviors can help us recognize our strengths and blind spots as they relate to money.

Starting from square one in financial literacy can feel overwhelming — especially if you are like the many savvy, intelligent clients I work with who believe, “I should already know this stuff.” Remember that learning is a marathon, not a sprint, and you simply need to focus on putting “one foot in front of the other.” Before you know it, you’ll have covered more ground than you thought possible.

Questions to spur action

What topics might be relevant to you in the near future? What resources do you plan to check out to expand your financial acumen? Who comes to mind for a financial mentor?

Whether you grew up with wealth or it is a relatively recent event for your family, figuring out how wealth impacts you and what your responsibilities are can seem daunting. You might feel isolated or unsure of who you can share your questions or feelings with. Remember, there are many who have been in similar shoes and many resources are available to support you.

The Cresset Family Governance and Education team can help you think through these questions and more. Contact us below.

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About Cresset

Cresset is an independent, award-winning multi-family office and private investment firm with more than $45 billion in assets under management (as of 04/01/2024). Cresset serves the unique needs of entrepreneurs, CEO founders, wealth creators, executives, and partners, as well as high-net-worth and multi-generational families. Our goal is to deliver a new paradigm for wealth management, giving you time to pursue what matters to you most.

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