Most of us are familiar with the term generational wealth. When we start saving for a child’s college fund or inherit something from a family member who has passed away, we are building wealth not only for ourselves but for the next generation. This article will help explain some common misconceptions of generational wealth and help you build your own for your children’s and grandchildren’s future.
What Is Generational Wealth?
Generational wealth is any financial benefit that can be passed down from a parent or grandparent to their children. Examples of generational wealth include cash or savings, investments, real estate, and even businesses. Generational wealth can also include intangible assets, such as a parent’s ability to pay for their kids’ college tuition instead of having the child take out student loans.
So, suppose your parents have an inheritance, a life insurance policy, or even a family business that will eventually be passed down to you. In that case, you are the beneficiary of generational wealth. This also applies to your children and grandchildren. If you are a homeowner, business owner, or have a portfolio of investments, you can pass these assets down to your children to bolster their financial position in the future.
Why Does Generational Wealth Matter?
Building generational wealth is a way to provide security for your children and prosperity for your family generations into the future. It’s a big part of your financial legacy. What you save and invest in now will contribute to your child’s ability to gain more education than you did, earn more, and eventually build wealth for their children in the future. Generational wealth can also be passed directly to grandchildren or other family members you want to help out as you get closer to retirement.
Not every family starts with generational wealth, however. Families from disadvantaged backgrounds often do not have enough wealth to pass down for generational wealth to build. Perhaps you are the first member of your family to go to college or own a home. In that case, the growth of generational wealth starts with you. Even if you do not inherit from your parents, you can start building generational wealth for your children.
How Can I Build Generational Wealth for My Family?
The first step to building wealth is building ownership. Anything you own builds equity over time, whether it be a business, real estate, or portfolio investment. Unlike the salary you earn or the money you save, these assets will grow in value that you can pass down to your family.
Finding suitable investments that not only help your family but also align with your family values is the best way to build an inheritance that will enrich your children’s futures. To learn more about investing with your family values in mind, contact us today!