You may have heard of ‘generation wealth’ and probably pushed it at the back of your mind, just because you have a lot of things to accomplish.
For instance, you may be working on your debts or saving money for your future investments. Meaning, building generation wealth is not your immediate priority. But you can still integrate the plan in your long-term financial goals.
Those people who inherit generational wealth have some financial advantage over those who are starting from scratch. These people are able to avoid costly debts that may deter their financial growth.
It could be that you are not sure what generation wealth exactly means. May be that’s why you have not focused on it. Don’t worry! This article clearly defines what it is and how you can build it with time.
What is Generation Wealth?
This is wealth that is passed down from one generation to another. It consists of financial assets such as property. If you are in a position to leave something behind for your children or grandchildren, then you have built part of your generational wealth.
For example, if you pass down income generating assets to your children, you keep your family financially stable. Generational wealth starts to build if your children are able to add onto it before passing it on again to the next generation.
How to Build Generation Wealth
The concept of building generation wealth is simple; you need to acquire assets or save money that you won’t spend when you retire. Then, you pass the assets and money to your children or a younger generation. The easy way to do that is by accumulating your wealth. Here are some of the ways you can start to build your wealth in order to leave a legacy of wealth to your children.
1. Invest in your children education
Mostly, education provides a way for your children to be independent. With education they are able to pursue careers that are well paying and can help them add to the available wealth. No one can take education from them. Therefore, if you help them navigate through college without debts, they will be set for a brighter financial future above their peers.
Beside the formal education, you can give your kids financial education so that you can help them start building generational wealth. Start by having an open conversation about money where you give them a chance to ask questions. Financial literacy equips them with knowledge to be financially responsible adults by the time they are leaving the house as adult.
2. Invest in stock exchange market
Investing in stock is a long-term way to create generation wealth. It has the potential to continue growing for many years. It may look scary but it’s the best way to build wealth passively and protect your money from inflation. As a beginner, you can start by low-cost index funds which can provide a long-term growth opportunity at a low fee.
3. Invest in real estate
Investing in real estate is a long-term way to build wealth. It is reliable in that it brings a steady cashflow beside increasing values overtime. The best part about real estate investing is that the tenants are the people who pay down the debts service as you enjoy the monthly benefits of the cashflow.
You can opt to have a shorter mortgage term, such as 10years period and have the tenant’s payoff the loan. You will realize that the debt is gone within a shorter time and start enjoying a continuous cashflow. Additionally, the market value of the property will appreciate over time.
4. Start a business to pass down
Starting a business is another way to build generational wealth. Businesses do have great potential for success if well managed. The best experience in life is when you are able to hand over successful business to your children.
Approximately 30% of successful business are family-owned businesses. If you expect success in future then you need to encourage your children to work in your business at a young age. It can help them develop interest in the business. If your interests and abilities align with those of your children, then it is possible that your business will continue to the future.
5. Take advantage of life assurance
Life assurance is a tool that grant your children security in case you were to die unexpectedly. The life assurance company will pay your beneficiaries as part of death benefits to help them recover from the loss. This is especially important if you have children who rely on your income for financial support.
6. Save money
Saving is another way to build generation wealth. It is a simple concept not followed by many people. Some people claim that they do not have enough to spend and save. However, with a budget you can be able to save.
Saving provides your dependents capital to invest in different areas. Also, with savings they are able to cater for your old days.
Create multiple streams of income
Creating multiple streams of income makes it easy to navigate the financial challenges of life. In fact, millionaires have multiple streams of income. There are several streams of income and the most common is passive income.
Passive income is when you earn from your assets after you have set them up. You don’t need to work daily to earn the income. you only need to set the foundation that will continue earning you money.
Bottom line
Building generational wealth require some plan. Investing in your children financial education is the first step since they are the ones to take over from you. Clearly name the beneficiaries to avoid the conflict that may come after you are gone. A financial will can ease the process.
