5 Steps to Make Financial Success a New Family Tradition

We’re all influenced by our parents and grandparents. They passed along attitudes and values that can provide life lessons.

And when it comes to money, some of us have great examples to imitate. Some parents saved for their retirement and could help their kids with a little cash. But many of us weren’t so lucky. Our parents stored away their cash or put money in a savings account without much interest. Sure, it’s good to have some money set aside, but a different approach can help your money grow.

With a solid plan for growth, you can look ahead to milestones that reflect your values. These might be:

• Seeing your kids graduate without tons of college debt (maybe even crossing the stage at Howard University or Florida A&M).

• Starting a business (or taking a side hustle to the next level).

• Owning a home (or buying your parents a house so they can say goodbye to the landlord).

• Donating to your church (or another cause you believe in).

• Whatever you can dream up!

It’d be a gift to the next generation to reach financial confidence and set new family traditions about money. Along the way, you can get help from a financial advisor and learn about some new opportunities. A good route might include using some financial tools you may not have heard enough about.

To get started, consider these five key steps:

1. Prepare for your family’s education

Save in advance for your kid’s school, even if you have some debt of your own. One common way to save for education is through a 529 plan. The account will grow tax-free. Then, as long as your beneficiary uses the money for qualified educational expenses, they won’t owe federal tax when they withdraw the funds.

You can get tax credits or tax deductions now—and most states don’t tax qualified payouts (called “distributions”). If the beneficiary doesn’t need the money for school, it won’t go to waste. It can go toward another beneficiary or the original beneficiary’s retirement in a Roth Individual Retirement Account rollover.

2. Save so that you don’t have to work some day

At the end of our working years, life will be different from what our parents and grandparents experienced. It’s smart to put money away as soon as you’re able, so check whether your employer offers a plan like a 401(k) or 403(b). These accounts allow you to save on taxes as you store up for a comfortable retirement, and you typically contribute the money directly from your payroll.

If you’re self-employed or a plan isn’t available through your job, look into an Individual Retirement Account (IRA). It’ll work a little differently than an account sponsored by your employer, but it will help you save—while keeping more of your money instead of paying it in taxes.

3. Safeguard your family’s financial stability

This tip might really surprise you. You may think of life insurance as money for funeral expenses, but there’s much more to it. A policy can help your family pay for things and stay in their home if you pass away earlier than expected. Life insurance can help ensure your loved ones will keep the family home, avoid picking up another job and achieve their college dreams.

You have many types of life insurance to choose from to meet your needs and your budget. Term life insurance will pay a death benefit during a certain time frame. But there’s also permanent life insurance, which pays a death benefit no matter when you die (as long as you pay your premiums when they’re due). And permanent life insurance includes additional benefits that you can use when you’re alive.

Whole life insurance, for example, provides a lifelong death benefit and builds cash value that’s guaranteed to grow year after year. Once your policy builds up cash value, you can access it for any reason, like to upgrade your house, help pay for education or take advantage of a business opportunity. (But accessing cash value does reduce your death benefit.)

4. Strengthen your family’s safety net

Your ability to earn a living is probably the most important financial asset you have—it funds your expenses and goals for the future. While it may not seem like it, even an ordinary paycheck adds up over time. All your pay will total hundreds of thousands of dollars, maybe even millions over your lifetime. But if you become disabled and are no longer able to work, you could lose that important stream of income. And unfortunately, disability is fairly common. About one in four people will become disabled by illness or injury before age 67.¹

Disability income insurance can provide a critical safety net, allowing you to cover your expenses and continue building your wealth if you’re unable to work due to injury or illness.

5. Talk to a financial advisor

The good news is that you don’t have to figure this out by yourself. Talking with a financial advisor can be a game changer. In fact, Northwestern Mutual’s 2024 Planning and Progress study showed that, on average, African Americans who have a financial advisor:

• Expect to retire more than two years earlier (age 61 versus 64).

• Plan to pay off college debt 5 years faster (pay off at age 41 versus 46).

• Have nearly three times as much in retirement savings ($71K versus $26K).

Your advisor will ask thought-provoking questions to guide the conversation and help uncover opportunities. They’ll learn about your biggest financial fears and deepest dreams to tailor a financial plan with recommendations just for you. Learn more from Northwestern Mutual about leaving a financial legacy.