“Generational wealth is just the idea of structuring your assets and using your assets in a way that benefits the next generation,” Vice President of Planning and Investments for Generational Wealth Advisors Stephen Hart said. “When someone gets a very large inheritance, it rarely survives more than one or two generations.”

As students enter college, they are faced with the reality that they will soon be responsible for acquiring wealth for their family. 

“I feel like, with the cost of living today and with having to pay for so much when I’m older, it’s almost impossible for me to just not think about money as I go through school,” human biology freshman Emma Martin said. 

Assistant professor in the Department of Economics Benjamin Bushong said students can create wealth through “the magic of compounding interest.”

“There’s no other secret, unfortunately. And the way that we capitalize on compounding interest is by utilizing small savings over large periods of time,” Bushong said. “This is unfortunately one of the reasons why generational wealth and generational wealth transfer is such a tricky issue. It can lead to division in populations because those who have debt from student loans, they can’t acquire significant savings.”

The difference between college students now and their parents is that their parents inherited a more reasonable amount of money than current students.

Hart said he thinks there are a lot of college students who feel like there will be less wealth available to them.

“I don’t think there’s a very high confidence that their parents or grandparents, for that matter, are going to be available to help them with costs or plan to leave them a large inheritance of some sort,” Hart said. “I think that confidence is probably pretty low, especially as we see the baby boomer generation starting to retire.”

In relation to the phrase, “OK, boomer,” Bushong said he believes that baby boomers had less to worry about financially. He said they don’t understand the financial struggles of students today. 

The cost of some things — like an education — have changed since the baby boomer generation, as well as the demand for an education in order to acquire a good amount of wealth. 

“The intergenerational wealth transfer that the baby boomer generation faced was much larger, and their student debt burden was much lower. As a result, they in their early and mid 20s were able to accrue significant savings and build wealth, whereas students now simply don’t face that reality,” Bushong said. “It’s more difficult to build generational wealth or to maintain it. It is much, much, much more difficult to build and maintain by orders of magnitude.”

Considering expenses their parents have gone through, as well as their own debts, Bushong said he recommends students be aware of their spending and the interest rates of the loans they take out for school in order to build up their own wealth.

Students should aim to have loans with low interest and the ability to pay them off in order to prevent more interest from accumulating, Bushong said. 

When it comes to acquiring wealth, students who come from different backgrounds have different ways of looking at money.

“My parents have been really frugal throughout my life, and they make it known to my siblings,” Martin said. “When it comes to having meetings with the people that manage their stocks or the people that manage their funds in all sorts of our bank accounts, whether it’s college, their own savings, their retirement stuff, they’re really on top of it.”

Students who come from first-generation families tend to feel more pressure to be the ones to obtain wealth to pass on to their future generations. 

“I feel pressured to succeed financially because I am a first-generation college student, and I think that one of my biggest goals is to be able to bring my mom and sisters and just family what I know they deserve,” electrical engineering freshman Joshua Kish said. “I just want to give my descendants the best shot they have at life and creating generational wealth is going to give them a better head start than I had.”

According to Bushong, acquiring wealth is more difficult than maintaining wealth, which adds to why students from disadvantaged backgrounds often find it harder to acquire the wealth they desire. 

“If you are the first in your house or in your family to get a bachelor’s degree, you are also likely to inherit very little wealth from your parents. And you’re likely to face a harder set of economic circumstances than appear,” Bushong said. “There’s a tricky force pushing against that when it comes to the fact that many people from disadvantaged backgrounds don’t have the starting point, but their peers do. And again, through the magic of compound interest, the starting point matters quite a lot.”

No matter the background, a simple way of becoming aware of the generational wealth college students are expected to acquire is to keep track of all the loans and other expenses one has. 

Students should develop good financial habits earlier rather than later, as saving during college will help.

“It’s a huge thing for us because there’s so much that you can achieve by starting to save early and building good habits early,” Hart said. “It can provide you so much freedom in how you build up your finances and what you can build up from an investment standpoint, but you just have to be dedicated to starting that from day one and not waiting until you’re in your 30s to start saving.”