Equipping young people with the skills and understanding to make informed financial choices is imperative to building a resilient and prosperous future for individual families and for the nation as a whole. Today’s young people are tomorrow’s leaders and stewards of wealth. The aim of this article is to offer guidance on practical considerations for both older and younger generations to promote long-term financial stability and mutual trust.

Key considerations for the older generation

Estate planning is a foundational pillar in this process. For those preparing to hand over wealth, it’s not just a legal necessity but a crucial step in preserving a legacy. Having a will, power of attorney and relevant trusts in place ensures your intentions are respected, helps avoid family disputes and can significantly reduce tax liabilities for heirs. Starting early provides flexibility to adjust as circumstances evolve.

While discussions about money can sometimes be uncomfortable within families, clear communication is incredibly valuable when expectations are openly shared from the outset. This transparency fosters trust, helps to avoid misunderstandings, and encourages a collaborative approach to managing wealth. It is not merely about passing on assets, it is about passing on a legacy and the values and principles that have shaped it, making it easier for future generations to manage the inheritance you leave behind with confidence and respect.

Another key aspect is education and mentorship. Passing on financial knowledge, insights and lessons learned is perhaps the most enduring gift one generation can offer the next. When younger family members understand how their family’s wealth was built, and the values that guided its growth, they are better positioned to sustain and grow that legacy.

Philanthropy, too, plays a meaningful role. Charitable giving in your financial plan offers tax advantages and instils a more profound sense of purpose, especially in younger family members. It encourages the next generation to think beyond themselves and connect their financial decisions with their social impacts.

Youth and financial stewardship: Key considerations for the younger generation

For the younger generation, receiving generational wealth presents opportunities and responsibility as well. The choices made early on can determine whether that wealth is preserved or eroded. Financial literacy is essential – from understanding budgeting and compound interest to exploring investment strategies and managing risk.

Fortunately, today’s young people are engaging with finances much earlier than previous generations and financial service providers support this with interactive tools, mobile apps and educational content tailored to younger audiences. So, while embracing technology is essential, it shouldn’t deter you from listening to expert advice. A hybrid approach — blending digital tools with personal financial guidance — often yields the best outcomes.

Starting to invest early is a highly effective strategy. With the power of compound interest, small, regular contributions can grow significantly over time. The secret is consistency, patience, and understanding that wealth creation is a long-term journey, not an overnight solution.

Many young investors are also drawn to values-based investing, particularly environmental, social and governance (ESG) strategies. These options allow you to align your financial decisions with your beliefs, supporting sustainability and ethical business practices while targeting strong returns.

Understanding the macro-economic context

What is a good starting point for young people?

Financial planning doesn’t exist in a vacuum. A basic understanding of macroeconomic indicators can significantly enhance your ability to make informed investment decisions and respond to changing conditions. Inflation, for example, reflects the rate at which prices for goods and services rise over time. While moderate inflation is part of a healthy economy, high inflation lowers purchasing power and can impact investment returns. To hedge against inflation, investors often turn to assets like property or commodities. Interest rates, set by central banks, influence the cost of borrowing and can either stimulate or slow down economic activity.

So, when inflation rises, interest rates often follow suit, which can cool down the economy and affect market performance. Conversely, lower interest rates typically encourage borrowing and spending, potentially boosting growth. Understanding that interest rates and inflation are interconnected tools that shape consumer behaviour and investment environments is crucial.

Then there’s market sentiment — how investors feel about the market at any given moment. Global events, political changes and economic forecasts often influence this. While sentiment may be emotional or speculative, it drives short-term market movements and is a factor every investor should monitor.

For instance, take the recent trade tensions or tariff changes in major economies. These geopolitical shifts can send ripples through global markets, impacting everything from commodity prices to currency values. Being informed about such trends allows young and seasoned investors alike to adjust their strategies proactively.

Generational differences, shared goals

Attitudes towards money can vary significantly across generations. Older South Africans, shaped by historical challenges such as political transitions and shifting retirement norms, often prioritise stability and cautious saving. By contrast, younger individuals raised in a digital, fast-paced world tend to embrace innovation, flexibility and values-driven decision-making.

Rather than allowing these differences to cause friction, families can view them as complementary. When the experience and long-term perspective of older generations are combined with the energy, creativity, and tech-savviness of the younger generation, it creates a powerful dynamic for lasting success.

Ultimately, intergenerational wealth is not just about money; it’s about the knowledge, values, and collaborative effort that will ensure that wealth endures. Families who take the time to plan strategically, communicate openly, and learn from one another are far more likely to build legacies that thrive across generations.

As you look to the future, remember that the strongest legacies are those built across generations with a shared purpose and vision!