What lost opportunities would you have been able to seize? How much farther do you think your life would have gone? What could you have done? Whatever you are feeling or imagining right now, that is the impact generational wealth can have on the lives of those who inherit it.
What is generational wealth, and why is it important?
Generational wealth is a store of assets that one generation passes to the next generation, and that generation passes it to the next, on and on. As UpkeepMedia.com explains, this wealth can consist of real estate, companies, land, mineral rights, intellectual property rights, stocks, bonds, and lots more.
This type of wealth is crucial because it means:
1. Your descendants won’t have to start from ground zero
You save your children and grandchildren from all the debilitating limitations you overcome to get to where you are today. While those struggles helped to make you who you are, they also prevented you from being all of who you can be.
2. It’s possible to break the cycle of debts
Your children will get an education and have a life even if you do not build generational wealth. But they may have to struggle with debts all their lives. Did you know that it takes the average person 20 years to pay off their student loans?
3. An opportunity to teach your kids how to manage money
This is one of the most valuable benefits of building legacy wealth. To preserve that wealth, teach your children how to manage money. Those lessons will always stand them in good stead throughout their lives.
How to build generational wealth
One thing to understand is that it can begin with you! All legacy wealth can be traced back to one individual who decides to choose a different path than that followed by everyone else around them. That decision resulted in the results their descendants enjoy today.
Here is a fascinating thought; your decisions today will affect your children and their children into the foreseeable future. That is true whether those are bad, good, or no decisions. You will be perpetuating the wealth or poverty of future generations by what you do or do not do today. What will it be?
These are the steps for building wealth
A. Personal wealth versus generational wealth
Almost everyone has heard stories of people who became millionaires after winning the lottery. But a few years later, they were broke and homeless. Why do most people who make so much money lose it before old age? The simple reason is most of them only think about making enough money for themselves. They focus on personal wealth instead of generational wealth; they don’t think about continuity.
B. Invest with generational wealth in mind
The typical mindset several people have when investing, especially when planning for retirement, is to accumulate enough wealth to last them to the end of their life. They are not building assets that will survive them but assets that will not deplete before they pass away. With this type of investment strategy, you cannot build generational wealth.
C. Own assets to pass them down
D. Learn to build a business
That is the heart – the engine room – of building generational wealth. The ability to take your money-making ideas and assemble them into a reality is what creates wealth. Whether you invest in real estate or buy stocks, you are running a business. Such a mindset will help you stay focused and professional when handling wealth-building activities.
E. Make stewardship a priority
More than 70% percent of people who inherit wealth from their parents lose that wealth. When their children become adults, none of the wealth is left to pass down to them. That often happens because the wealth-builder passes assets down to their children without imparting the know-how to manage that wealth. As a result, their children end up squandering their wealth.