Be the First Person in Your Family to Build Generational Wealth

By Josefin Gatsby on 11/25/2022
Wealth gives you financial freedom and more options in life. Many parents strive to build wealth in order to create a better future and for the generation coming after them. But building wealth that last generations is not an easy task!

Did you know that an estimated 70% of generational wealth doesn’t make it past the second generation? And 90% disappears by the third generation!

Let's say you work hard and invest your money right in order to pass down assets to your children. But how can you then balance the challenge of giving them financial freedom and also teach them to be financially responsible adults that understands the value of money? 

Here are a few ways to build sustainable generational wealth:
 
1. Invest in Your Child’s Education
 
Education can provide a way for your children to support themselves. A degree will allow them to pursue higher-paying jobs which can help them navigate their own personal finances. 

Raise your children to become financially independent and responsible adults so they know how to handle money by the time they leave the house. Education is one of the key factors to consider if you want the wealth to last. 
 
2. Invest in Real Estate
 
Real estate is a great way to build and sustain generational wealth long-term. Properties appreciates in value over time and provide steady cash flow from rental income. 

Building a diversified real estate portfolio that can be passed on to generations is one of the most reliable ways to grow and protect wealth. It is a great hedge against inflation, and since real estate is a hard asset, it is also one of the safest investments you can make. 
 
3. Build a Business to Pass Down
 
If your interests and abilities align with your children’s, it is possible they will want to take over the business you built one day.

Over 30% of family-owned businesses are estimated to have made it to the second generation. It is a good idea to get your children involved in the business at a young age to teach them how the business operates and how to successfully continue the business. It is also a good way to encourage them to want to take over the company one day.

4. Teach Your Children About Personal Finance
 
Knowing how hard it is to keep the wealth for multiple generations, it can seem pointless to save for a legacy of wealth. However, this can be prevented through financial education. If you don’t teach your children about financial literacy, then it is likely the wealth you leave for them will dwindle throughout their lifetime.
 
Be open about financial topics at home, buy children books about finances, include them in financial discussions, and let them listen to you talk through financial decision. 
 
5. Set Up a Trust
 
A trust is a legal entity you can use to hold and transfer assets to your beneficiaries. It is a great option to consider for parents of minor children. Trusts also provide benefits such as avoiding or reducing estate and gift taxes depending on the size of your estate.

Bottom Line 

The process of building wealth is challenging in itself. But with education and proper estate planning, you increase the chances of wealth to last. Make it a priority to pass your financial knowledge down to your children. This knowledge will be the best way for you to build and protect generational wealth.

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