Financial planning isn’t just about managing money in the current moment. Financial planning involving multiple generations can mitigate conflicts, ensure equitable distribution of wealth, and preserve family legacies. This wealth can allow generations of family to live out their values while supporting one another. Multi-generational financial planning is a proactive approach to managing wealth, ensuring sustainability, and supporting future and current generations to thrive. Through open conversations that consider the needs, goals, and values of each generation, families can create a roadmap for long-term financial success and stability.
We’re hearing a lot these days that the upcoming generation, Gen Z, doesn’t have a lot of hope for their financial future. They’re concerned about the price of housing, interest rates and that global economics are worse now than they’ve ever been. This sentiment of hopelessness is real, but it doesn’t have to be. Every generation has felt like they have it tough when in fact the global financial climate is improving, options have increased and support is out there. Despite the fact we’re hearing negativity around costs and financial barriers, there’s a lot of positivity to focus on. There is hope and there is certainly opportunity when plans are made, options are explored and the right conversations are had.
Intergenerational wealth transfer and family financial planning are topics that have had families squirming for decades. At Sea Glass Wealth one of our most valuable offerings is to facilitate these conversations and plant seeds for transparent conversations that get families on the same page when it comes to financial planning. We ask the complicated questions and then guide a values based discussion.
Here are some of the common conversations we’ve been having recently:
Instant Noodles vs Instant Gratification
Many in the Boomer and Gen X generation feel as though they built their foundation from the ground up. Many started in small cramped apartments or with several roommates, eating instant noodles on a regular basis to save their money over time and make a down payment. Gen Z has less patience for slow, steady and unsexy savings. Young adults’ expectations for their living situations are higher and their patience is lower. Managing the expectations of what parents can support their children with is a hard conversation especially when there are multiple children and an older generation who also requires care. Having these discussions and setting out the reality of what support is available sets the expectations clearly. Also, offering young adults tools, resources and support to move towards their goal increases financial literacy and demystifies financial planning.
Alternative Housing and Asset Options
Many families are getting creative with how they approach housing and acquiring assets. The sharing economy offers opportunities not only for car sharing but shared ownership in homes. According to a June 2024 CIBC Capital Markets report, in British Columbia the average gift for parents to give their adult children was $204,000 last year, however many don’t have access to that much liquid cash. Gifting is common but should be discussed and planned for. We also encourage conversations around other options for building wealth. Rent or lease to own and shared housing ownership is increasing in popularity and allowing a lot of young buyers to get into the market. We’re seeing more of this as families or friends purchase land or houses together to increase their equity while saving for their next investment.
Another housing possibility is leaving the bigger cities for smaller, more rural locations with lower housing costs and taxes. Intergenerational living is yet another option which leads us to the discussion of money and the various ways families can support one another without the exchange of cash.
Non-financial Currency
In Western Culture, the norm has been to finish school and move out on your own but recently many young adults are staying at home longer and starting their careers, and even their families, in their childhood homes. As well, aging parents are moving in with their children instead of opting for downsizing or moving into long term care communities.
There are a variety of ways, beyond a transfer of funds, that families can support the generations surrounding them using both financial and non-financial currencies such as time…
- Childcare: Providing regular childcare is an impactful and very valuable offering many grandparents are undertaking. This allows their grown children to work while their children are cared for at a minimal price when compared to market childcare rates.
- Living together: Rather than pay for elder care, many in the sandwich generation are having elderly parents move in with them so they can care for them in their own homes. This may involve investing in property together and sharing the space.
- Gifting: Parents helping their children with down payments on their first homes. Grandparents buying cars, paying for summer camps, supporting continuing education or family holidays is intergenerational wealth transfer that supports those family members with less expendable income.
- Family Businesses: Involving family members in a business can provide equity and opportunities for financial gain.
- Whole Life Insurance Savings & RESPs: Creating savings plans for young family members helps give them a huge step forward when they become adults. Some ways to help in this regard include making contributions to registered education savings plans or building whole life insurance savings for grandchildren that they won’t access until they’re adults.
- Inheritance: This transfer of wealth happens once a family member has passed. Understanding what is being allocated in wills can be beneficial for the next generation in managing expectations.
Banks and Taxes
When planning for wealth transfer it’s important to consider the tax implications. Capital Gains Taxes in Canada have changed this year which may impact Canadians hoping to gift money to their children. Effective estate planning and tax strategizing can be crucial for ensuring a smooth transfer of wealth across generations. This may involve creating wills, trusts, and working with professionals, like our team at Sea Glass, to minimize taxes and protect assets.
Communication and Collaboration
Open and transparent communication is essential for successful multi-generational financial planning. Families should engage in regular discussions about financial goals, values, and expectations, involving members of all generations in the decision-making process.
At Sea Glass Wealth we support families with these discussions. As an objective facilitator we navigate the tough questions, ask the questions no one thought of and guide the discussion with a focus on values, goals and ultimately, legacy – staying true to the lives each family member wants to live.
Our advisors act as guides to help families navigate multi-generational financial planning, wealth management and the journey those enable. We create a plan that works for the circumstances of today with the ability to be nimble and evolve that plan as circumstances, values and goals evolve. We create a map that accounts for detours, bumps in the road and unexpected opportunities. We give context to your roadmap, taking a personal interest in guiding you and your family along. Offering financial literacy, providing education, resources and years of experience working with families, we empower each individual as well as the family unit to make informed financial decisions that carry forward the family’s legacy responsibly and cohesively.
Intergenerational wealth transfer can be a complex and sensitive topic, as it often involves emotional, legal, and financial considerations. It raises questions about fairness, meritocracy, and the role of family in shaping economic outcomes. Proactive planning fosters a sense of stewardship, responsibility, and unity within the family. By engaging in proactive discussions about finances, families can increase financial literacy, empower future generations to make informed decisions, strengthen family bonds, live out their values and foster hope, despite what the media is saying.
Let Sea Glass Wealth be your guide. Invite us to guide this discussion with your family and map out your multi-generational financial planning:
https://seaglasswealth.com/contact/
We are looking forward to the opportunity to meet you! For more information, please feel free to reach out.
- Check out our upcoming events.
- Contact Us for more information on Sea Glass Wealth Advisory Group.
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