Generational Finances: A 7-Step Guide to Building Family Wealth
The average inheritance left to family members is just shy of $300,000. To some, that may sound like a little, especially when split among multiple people. To others, that money could be life-changing.
No matter how you look at inheritance averages, it’s nice to be able to leave anything to future generations because it gives them an opportunity to build on momentum and slowly come up the ranks of life.
Is it your intention to pass down family wealth? Do you know how best to do that?
If you have the intention of leaving money to loved ones but aren’t sure which strategies will maximize that desire, keep reading. In this post, our team shares a handful of helpful tips that can be game-changing.
1. Learn How to Save
Building wealth and passing it down so it turns into family wealth hinges on your ability to save more money than you earn. Believe it or not, this isn’t a skill that comes second nature to all people.
Some find themselves in an endless loop of debt by overextending themselves via leaning on lines of credit. Don’t fall into that trap.
Always be mindful of your expenses, tax obligations, and spend in a way that enables you to set a little bit of money aside each month.
2. Invest in the Stock Market
Over a 100 year period, America’s biggest companies have given average returns of roughly 10% to those that have invested in them. Compare that to the sub 1% returns you’re probably getting from your savings account and it becomes clear why it’s so important to buy into stocks.
Stocks can go beyond buying into companies. You can buy into precious metals as well, which is the preferred means of wealth-building touted by organizations like the Crown Gold Exchange.
Whatever you choose to invest in, do homework to make sure your potential for returns outpaces more secure investments like interest-bearing bank accounts.
3. Have a Long-Term Care Plan
We can’t tell you how many people we’ve seen build family wealth that they intend to pass down only to lose it all to long term care. Some people end up paying nearly $8000 per month just to have their necessities taken care of (meals prepared, help bathing, etc.).
The sooner you and your family can figure out affordable care options, the better you’ll be able to ensure that the money you’ve built up will make it into the pockets of your loved ones.
4. Buy Real Estate
Real estate is said to be the most consistently successful generator of wealth on the planet. You needn’t look any further than the whopping 17 trillion dollar worth of the real estate market to appreciate that point.
Whether it’s owning the house you live in or scooping up investment properties, being able to leave homes to your loved ones can easily secure their futures.
If you’re looking to invest in real estate now, be wary of commercial proprieties as COVID has caused serious market shifts in that space that aren’t likely to fully recover. Residential housing, however, remains relatively secure so long as governments do not limit a landlord’s ability to collect rent.
5. Build Businesses
Houses aren’t the only physical asset you can pass down to loved ones. Businesses are another great asset that can ensure wealth.
Passing down a business may strike you as something you’d need to have planned for a long time in order to accomplish. Some people buy businesses with the sole intention of passing them on.
If you don’t have a business you started that you could make available to your loved ones, check out sites like LoopNet or BizQuest to see organizations that are being offered on the open market.
6. Create an Education Fund
Few investments are more worthwhile than an investment in one’s education. Unfortunately, getting an education can be expensive.
To ensure that nobody in the generation below you struggles to pursue higher learning, putting together an education fund that offers to pay for college is a great idea and can do wonders for building long-term family wealth.
You can learn more about setting up an education fund/trust here and will likely want to consult a lawyer to ensure stipulations surrounding your fund’s money are respected.
7. Get Intentional When Teaching Finance
Speaking of education, do the young people in your life know the value of a dollar? Do they know about the virtues of saving or the basics of investing?
If they don’t, sit them down and teach them.
By getting intentional when teaching kids about finance, you can plant seeds in them that will solidify their ability to not only enjoy the wealth you pass down but to build wealth of their own so they can keep the cycle going.
When You Make Family Wealth a Priority, It Practically Builds Itself
The moment you make it a priority to build family wealth, you’ll find that your life will start to become richer on autopilot. That’s the power of intention!
We trust our post has given you more than a handful of great places to start on your generational wealth-building journey. We also appreciate that conversations like this one are ones that require a constant revisiting and learning.
Are you hungry to invest even more in your financial education? Do you still have unanswered questions when it comes to building generational wealth? If you do, we welcome you to consider exploring more of the content we have that touches on the subject on our blog!