I have heard these two words being mentioned a lot over the past few months. Of course, it is easy to say it out loud, but how do you put it into action? Do you even know what generational wealth is? Or how to set your family up for
success now and in the future? You may hear the words generational wealth and say to yourself that sounds familiar or like a good idea. Maybe you are working on getting out of debt or saving money for an important vacation. Let us
First we need to identify the definition and purpose of generational wealth and understand the value of money and setting your family up for success.
Q: What is Generational Wealth?
A: Wealth that is passed down from generation to generation. Wealth can be finances, assets, or education. This means that you are taking care of someone in advance. Passing on knowledge and wealth. When you are financially stable, you can take the burden off yourself and your family by providing for them in areas they do not need to stress over.
What is your legacy and what are you leaving behind to your immediate family? Think about it. Do you have to dig deep? Are you realizing you are already at that point or do you have some work to do?
The first step before even thinking about leaving a legacy is the understanding of the value of money. We taught our boys at a young age the value of money, how to earn money, tithing, saving, and being smart when it comes to name brands, and trying to impress others. If you cannot keep $10, how will you be able to manage $100,000?
Setting Your Family Up for Success
So where do you start? Passing down generational wealth can come in many forms. Some people invest in stocks and build wealth to pass down through their shares. If stocks are not your thing, you can also start with a savings for
your family. Having a savings for a college or home fund for your children can be greatly beneficial, especially if it accrues interest and is not touched. There are lots of banks that have great interest rates on savings accounts depending on the amount in the account and how much it increases monthly. Would you be in a better position knowing that your college is paid for and the only thing you need to focus on is a career?
What if you already had a career and your parents passed you down a home? Instead of worrying about a mortgage, you could be saving and making memories with your new family in your home provided to you through generational wealth.
Another way to set your family up for success is through businesses. If you have your own business, you can easily pass that down to your children. You are the owner and are in total control of who gets your business. There are often
family stores or restaurants passed down from generation to generation.
The same for real estate. This is a keyway to build lifelong wealth. Whether commercial or rental property, real estate earns an income and is steady cash that is generated monthly. We currently own three homes. These produce passive
monthly income now but can later be used as a primary income or additional income for our next generation. When our children are older, if they want to live in either of them, they have that option. These homes can be passed down
to them or sold for them to purchase the home they want without the need for a home loan.
Tying it All Together
Once you have identified what type of generational wealth you want to pass on, it is time for action. Writing your will is a great start. You can and should annotate everything you want passed down. All real estate, monies, bank accounts, investments, etc. should be identified. The more detailed you are with the people, ages, and amounts the better.
Building and passing down wealth can be an intimidating and challenging thing. Every family is different, so start where you are and do what works for you. The first step is to identify your savings, budget, what you want to leave to your family, and how you are going to do it. You have got this. Remember to teach your children the value of money and assets now, so they understand the importance of it and how to use it in the future.