Warren Buffet funded a $2 billion foundation for each of his children.¹ Gloria Vanderbilt received a trust worth $36 million when she was just 15 months old.² There are plenty of famous stories about one generation leaving a notable fortune for the next.

What gets less attention is the average person saving what they can when they can, hoping to pass along something—from an inheritance that amounts to a first-home down payment, to college tuition that helps a young person start out with less debt.

If you’d like to leave a legacy, it’s worth learning how to build generational wealth, whatever that looks like for you.

These steps can help.

Define your own financial legacy.

Three numbers to consider:

• The median inheritance is $55,000.³
• Parents pay just under half of college costs for their students.⁴
• Almost half of all parents helped their adult children financially during the pandemic.⁵

These examples—leaving money after you die, investing in a college education, and assisting during tough times—are all ways people ensure a financial legacy. They’re also examples of how each financial legacy looks different and may come at different times.

“We all quickly default to ‘passing assets’ as a legacy, but it’s not just that,” says Stanley Poorman, a financial professional with Principal^®. “What if your legacy is experiences with your family? Then the challenge becomes figuring out how you can use your money today to create a living legacy.”

The first step may just be to decide what you’re going to pass along to the next generation, and then to talk about it, says Heather Winston, assistant director of financial advice and planning at Principal.

“The conversation doesn’t have to be purely financial,” she says. “Perhaps it’s about helping future generations with money while you’re alive or leaving a tangible item like a car or house after you’ve died.

“We define wealth in many ways; it isn’t just money.”

Talk about that legacy with the next generation.

You may have been fortunate enough to take your family on vacations, pay for a portion of college, and eliminate all your debt during your lifetime—these are no small accomplishments.

“If you’re the first generation that’s been able to build wealth, you’re demonstrating your values and instilling them in others,” Poorman says.

Perhaps you’ve also decided you want to leave money to a charity. Be open with your loved ones about your wishes so they understand your decisions and can help make them happen after you’re gone.

“Far too often we act as if our lifetime is infinite when sadly it’s not,” Winston says. “That’s why it’s important to have those conversations early and often, and this includes communicating the ‘why’ behind your wishes.”

Integrate your financial legacy goals into your yearly budget and long-term financial plan.

Say that you want to budget for a new kitchen remodel in a year or two. You’re probably already thinking about what it might cost and how you might save for the project.

Take the same approach to build generational wealth. If your goal is to pay for a year of college, setting up and adding to an education savings plan can help. If you want to gift an annual paid-for family vacation, establishing a rough budget and creating a vacation-only automatic savings deposit gets you closer to that goal.

“Ultimately, it’s not just thinking about it but taking action, and that can be hard,” Winston says. “But that’s the difference between a dream and reality. To be real, you have to make it concrete.”

Complete documents to protect your legacy.

If you do intend to leave something to others, explore what to include in your estate plan.

The most basic estate-planning tool is a will. Because it can sometimes be tricky to pass your belongings to others with a will, many people choose to add a trust to their estate plan. This is a legal structure that clearly designates what happens to your assets and who has responsibility for managing your wishes.

Complete these documents with your legal advisor, and then check in with your financial professional at least once a year to keep tabs on your progress toward your goals.

Think about building generational wealth incrementally.

Warren Buffet worked in his grandfather’s grocery store and delivered newspapers in high school. He still lives in the house he bought in 1957 in Omaha, Nebraska.⁷ “Buffet made very deliberate decisions to be able to amass wealth and educate generations of investors to come,” Winston says.

None of us are Buffet. But let’s say one of your financial legacy goals was to pay all college costs for your children. Maybe you’re only able to save enough for half of the tuition and fees. Even though you may feel like you didn’t accomplish your goal, consider this: Helping your children earn those degrees has trickle-down wealth potential. College graduates’ lifetime earnings are at least $630,000 more than those with just a high school diploma.⁸ It makes the effort worth it.

“It comes back to the fact that money is just a tool,” Winston says. “It isn’t a replacement for the value that a person brings.”

That’s a good final thought about building wealth: From one generation to the next, it’s often incremental.

“Each generation can, and typically does, a little more,” Winston says. “You can pass down ideas and beliefs about what you want, why you want it, what you hope your heirs’ lives will be like. But what they make of it will be up to them.”