This Will Make Your Money Last Forever

For most people, it takes a lifetime of investing to meet your own financial needs. If you're just as concerned with those who'll come after you as you are with your own needs, however, you may find that following a different path with your finances can create wealth not just for you, but for your children and grandchildren as well.

Beyond the conventional approach
Ordinarily, putting together a successful financial plan for yourself involves taking an inventory of your needs and resources. You have to weigh the money you'll receive from various sources against all the expenses you'll have. Ideally, your plan will succeed in matching up your resources with your needs to ensure that you'll have enough to cover everything.

If you're only concerned about yourself, then that's a perfectly valid strategy. It ensures that you won't be a financial burden to your family, and it gives you a great chance for a comfortable retirement with the lifestyle you've always dreamed about.

How to build a dynasty
But if you want to make a lasting impression on your family's finances for generations to come, you'll want to take a much longer-term approach. Such an investing plan doesn't just take into account your own needs; it also considers how your money can best help future generations.

Here are some of the changes to a standard financial plan you'll want to consider that will potentially make a huge difference to your children and grandchildren.

1. Embrace risk.
Ordinarily, as you get older, you start to invest more conservatively. You give up the high-volatility stocks that give younger investors the best chance for huge gains in favor of more stable stocks that make your portfolio less apt to bounce wildly during turbulent markets. Eventually, if you save enough, you may even give up stocks entirely in favor of bond investments that guarantee you'll have the money you need whenever you need it.

Yet from an intergenerational perspective, all that time spent in conservative investments is largely wasted. Think about it: You might spend 30 years in retirement, and the returns you give up by being out of stocks that long could mean huge losses for your heirs from lost opportunity cost. Just look at what some stocks have done over the past 30 years:

Source: Yahoo! Finance.

So to earn the most for future generations, it pays to keep any money you can spare in stocks. It increases the risk from your personal perspective, but it could pay huge dividends to your children and grandchildren.

2. Use your retirement accounts.
The other big benefit you can take advantage of is tax deferral. With proper planning, your heirs can spread out the tax burden of inherited IRA and 401(k) accounts over their lifetimes. With Roth IRAs, the same tactic can provide tax-free income well into the future. Generations of deferred or eliminated tax can save your family millions over the long haul.

Keeping money in retirement accounts runs counter to some financial advice, in which it may make sense to use that money first if you're taxed at relatively low rates. With an eye toward the future, though, you might instead want to convert that money to a Roth IRA to get those taxes out of the way now. You'll pay taxes on the conversion, but your heirs will enjoy a lifetime of cash flow with no taxes to deal with.

3. Instill your values.
The most critical part of multigenerational planning is making sure your kids and grandkids are on board with your plans. Without them, all of your hard work will go to waste.

As hard as it is to talk about finances with your family, the success of your plan depends on getting them to buy in on your philosophy. So it's worth it to make the effort now. Doing so will prevent misunderstandings later.

Putting yourself first is a simple way to plan your finances, but it's not the only way. If family is more important, then these changes could give you a better chance at helping to preserve your family's wealth for generations to come.