5 Ways to Start Generation Beta on the Right Financial Foot

The children born from 2025 to 2039 will be known as Generation Beta, the kids of younger millennials and older Gen Zers. Many of these children will live into the 22nd century, navigating technologies and societal changes we can’t predict.

They’ll also grow up in a financial landscape that looks different from ours, with rising costs of housing, healthcare, and education. While it may be hard to plan for all of Gen Beta’s financial needs, there are small steps you can take now to help set your child up for future financial success.

Key Takeaways

• Generation Beta, born from 2025 to 2039, will grow up fully immersed in technology and a world facing environmental challenges.
• Parents can help set their children up with a solid financial foundation by opening up a 529 plan, creating a will, updating beneficiaries, and getting life insurance.
• Teaching kids about money and investing, such as in a custodial IRA, can help secure their financial future.

Who Is Gen Beta?

Generation Beta, born in 2025 and the following 14 years, will grow up in a world shaped by rapid technological advancements and an evolving climate landscape—possibly a deteriorating one.

Like Generation Alpha, Generation Beta will be fully immersed in digital technology from the day they are born, but even more so. Their childhood will include smart devices, automation, artificial intelligence, virtual learning, and perhaps even decentralized finance.

They will also be born in and inherit a planet facing extreme climate challenges, the outcome of which can be hard to predict by the time they are teens and young adults. These environmental challenges are likely to influence their financial decisions.

Given the evolving and unpredictable challenges they face, it’s important to get them started on the right financial foot. Here are some steps you can take today to help your child along their financial journey.

Open a 529 Plan (Even If They Won’t Attend College)

With the extremely high cost of college that is expected to continue rising, college may not be the best choice for everyone, especially given the numerous avenues people can learn from today. Still, opening a 529 is a good idea, as this tax-advantaged plan isn’t just for college anymore.

529 plans can be used for K–12 education, trade schools, and even student loan repayments. The earlier you start contributing, the better, as your contributions have time to grow, providing your child with a larger fund to use toward education.

According to CFP Hazel Secco, president and founder at Align Financial Solutions, whom we spoke to via email, “The tax-free growth and flexibility of a 529 make it a powerful planning strategy, not only for education but also for long-term financial success, as recent changes allow unused funds to be converted into a Roth IRA for the child’s future retirement savings.”

Make a Will and Update Beneficiaries

Making a will is one of the best ways to ensure your child is financially secure should something tragic happen to you. While it’s never easy thinking about worst-case scenarios, being prepared will benefit your loved ones.

Creating a will ensures your wishes are met and that your child is protected. In the will, you can specify who receives your assets upon your death or incapacitation. Stating that your home and other assets go to your child upon your death will ensure they’re financially taken care of.

One benefit of a well-crafted will is that it helps speed up the probate process, ensuring that assets are transferred directly to beneficiaries without court delays.

Secco says, “The probate process can be costly, time-consuming, and emotionally overwhelming for heirs … that’s why I encourage parents to establish a will and other essential estate planning documents, such as a healthcare proxy and power of attorney as soon as possible.”

In addition to setting up a will, check and update your beneficiaries for important financial accounts, such as life insurance and retirement plans. It’s always a good idea to revisit these after big life changes: marriage or the birth of a child.

Increase or Get Life Insurance

If you have dependents, life insurance is a smart way to take care of them financially after your death. Life insurance helps with mortgage or rent payments, funeral costs, future education expenses, and any other financial needs your family may have. This is particularly important if you are the primary earner in your family.

While there are many types of life insurance policies, term life insurance is a good way to get started. Term life is cost-friendly and straightforward, with the goal of replacing your income when you pass. Term life comes in coverage length brackets, such as 10, 20, or 30 years.

Many people choose coverage amounts that span their working years, ensuring their beneficiaries can cover financial expenses if they die suddenly.

Teach Your Child About Money

Financial literacy is imperative to achieving and maintaining a healthy financial profile. Most education systems for children don’t teach financial literacy, so it’s up to the parents to instill this knowledge.

Teaching your kids about saving, budgeting, jobs, and wants vs. needs at an early age can impart lessons they will carry with them throughout their lives. As they get older, you can teach them about investing and even retirement.

Studies show that children start forming money habits at 7 years old, so it’s never too early to teach your kids financial lessons they can use later in life.

Note

There are many engaging ways to teach children about personal finance, such as podcasts (such as “Million Bazillion” and “Money with Mak & G”) and games (such as Bankaroo).

Invest in Their Future

While most of the expenses on your kids will be clothes, toys, and child care, you can also invest in their future at an early age. It’s a way of thinking about what else might benefit them when they’re older.

For example, setting up a custodial IRA when they start earning income will help with their retirement. Doing this as early as possible will allow more time for their money to grow through compounding.

The Bottom Line

Raising a child comes with a lot of responsibilities, including setting them up for a secure financial future. Through a few straightforward and intentional steps taken today, you can lay the financial foundation for your child’s success.

Generation Beta will face a financial landscape we can’t yet fully predict, but by implementing the actions discussed above, you can prepare them early and equip them with the tools to navigate whatever their future may hold.