Have you ever thought about why you need to make more money than what will cover your bills? Beyond retirement, you may feel the need to plant seeds that will grow for future generations to enjoy.
If you’re a mother, aunt, or loving family member, you want to give your children, nieces, or nephews the world. Perhaps you’ve set a savings account, or you have a college fund arranged in their name.
Many people who don’t have children also have plans to impact the next generation and make the world a better place.
Yet, what is the best way to create wealth? To pass on generational wealth, you need to have a good understanding of what generational wealth is, how you can build it, and the best way to pass it on to the next generation.
Many people define generational wealth as money or material resources such as a business that are grown and passed on from one family member to another. Typically, generational wealth passes from parents to children, grandparents to grandchildren, or even aunts and uncles to nieces and nephews.
Yet, I urge us to use a broader definition of generational wealth. Generational wealth might be passed from anyone in an elder generation to those in a younger generation. Through the passing on of generational wealth, we can live out our values and beliefs, even after we’re gone.
I also urge us to think of the gifts of learning and values we give to the next generation. Whether that be how we treat each other, the way we address mental health, charitable giving, and so much more, this is also included in generational wealth.
Generational wealth doesn’t mean just handing over a pile of cash to eager young people. It also means passing down values, education, and money management skills so that the money can be grown and preserved.
Did you know that up to 90% of wealthy families lose most of their wealth by the 3rd generation? It may have to do with the fact that a majority of parents prefer not to discuss wealth and money with their children. If you plan to create generational wealth that’s passed directly to your relatives, it’s important to have open conversations about your values, as well as the practical aspects of managing money.
For those who want to leave money to charities and foundations, it’s equally important to leave clear guidelines regarding how your legacy will be used.
Through teaching values and providing education, the goal is to avoid just giving the next generation fish (money). Instead, they’ll learn how to fish.
There are many possible roads to take when creating generational wealth. Here are some popular methods that you can use to create your own wealth to pass on to the next generation:
Building generational wealth can take years or decades, so it requires patience and planning. If you’re not sure how to get started, why not work with an experienced certified financial planner? I’m here to help you!
Planning for the successful passing of generational wealth is complex. There are many aspects to consider including wills, custodial accounts, beneficiaries, and parameters that will detail how the money can be spent. Yet, with a thorough plan, passing on generational wealth is a beautiful and meaningful gift.
Do you need help creating or planning how to pass on your generational wealth? Let’s talk about it! With a plan in place, you can impact the future.