Building generational wealth isn’t just about you – it’s about creating a legacy that serves your family for years and years to come.
What is the Definition of Generational Wealth?
Generational wealth describes an accumulation of assets and property that gets passed down from one generation to the next. It could describe the wealth that is generated by one person that is then passed down a single lineage, while it can also describe family wealth that is created collectively and distributed amongst each passing generation of family members.
The goal of generational wealth is to pass it down without erosion. generational wealth is easy to lose, so much so that most families lose their wealth within two or three generations.
5 Tips for Building Generational Wealth
Building generational wealth might seem like a lofty goal, but it’s achievable with proper planning and diligence. It’s helpful to take any big goal and break it down into smaller, actionable steps. Keep in mind that building wealth takes time; small, consistent contributions over time is more effective than making sporadic money moves. Here are 6 tips for building generational wealth that you can start taking action on right away.
1. Develop a long-term growth mindset
The first thing you’ll want to do is develop a long-term growth mindset. That’s because when you’re working on goals that could possibly take decades to achieve, it’s easy to get lost and lose steam along the way.
Research shows that writing down your goals increases your chances of achieving them by 42 percent. We recommend that you write down your wealth goals, including targets you’d like to hit when you reach certain ages or milestones in your life. Consulting with a financial planner may be helpful in determining realistic goals.
For most people, this includes creating a large vision that doesn’t just focus on you, but the legacy that you want to leave behind for multiple decades into the future.
2. Invest your assets
One of the most effective ways to grow wealth more quickly is to put your money to work. Putting money into a savings account is a perfectly noble concept — it’s a great place to put your money away for safekeeping.
It is recommended that you invest in the stock market and real estate to grow your assets in a more significant way. The idea of investing in stocks might be intimidating at first. However, there are a number of stock brokers that have made investing more accessible to beginners, Many offer intuitive platforms while supporting you with tutorials, support, and education. You can also work with a financial advisor who can advise you on investment decisions that best fit your individual circumstances and financial goals. We recommend starting small with a few low-risk investments, and upping the ante as you gain more experience and confidence.
Real estate is another popular way to build wealth in the long-run. Save for the occasional economic downturn, real estate consistently appreciates in value over time. What’s great is that buying a home is dual-purpose – it’s an investment that you get to live in! Your primary residence can eventually be sold, or passed on to a loved one. This in itself can provide profound financial relief for your family. You can also work your way up to investing in rental properties to lock in passive income for many years to come.
3. Invest in your child’s education
Your children will have increased access to high-paying opportunities with a college degree. If you’re able to set your child up so that they can go to college without taking out any loans, you’ll give them a head start financially.
4. Talk to your family about financial planning
So much of the generational wealth you’ve built will fall into your family’s hands. If you want it to last, it’s important to have open and transparent communication with them.
Many of us were conditioned to believe that it’s inappropriate to talk about money, to the point that it can be awkward and uncomfortable. However, by avoiding these critical conversations, children often grow up without any financial literacy or understanding of the family wealth plan. This lack of communication is in part to blame for the wealth erosion that happens all too often.
It will prove valuable to hold honest conversations with your family about core values and beliefs around money. It’s also helpful to talk to them about your assets, your estate plan, and your generational plan so that they understand what they will one day become responsible for. Through trust, communication, and education, you’ll increase the chances that the legacy you’ve behind will benefit as many generations as possible.
Create trust(s) to protect your assets
One of the most popular estate planning methods of protecting assets is creating a Trust. GTI Trust is a fiduciary agreement that is often included in an estate plan and holds assets for one or more beneficiaries. Through the Trust, you can specify which assets you want to go to whom. You can also dial down on some stipulations to make sure your hard-earned wealth is protected and distributed in a way that aligns with your generational wealth vision.
5. You can Protect Your Legacy with an Estate Plan
If the idea of building a long-lasting legacy seems overwhelming or even inaccessible, your feelings are honored.
Setting up an estate plan is one of the only surefire ways to protect your assets for the long haul and increase the odds that any wealth you’re able to pass down will make it pass the three-generation “curse.”
If you’re feeling ready to create a solid estate plan that will not only protect your wealth, but will also support your family’s future, Trust & Will has a number of options that are designed to fit your needs. Explore how you can get started today.
Is there a question here we didn’t answer? Reach out to us today or Dail +(234) 9082999291.
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