Generational wealth is wealth that is passed down through generations of your family. In order for it to be considered generational wealth, it has to be passed down to at least one generation and can be any asset with monetary value, including real estate, stock market investments, or a business.
One of the most important things about generational wealth is don’t wait to start investing your money. It will take time to build up and will grow over time, so even if you don’t have a lot of money to invest, even a few dollars can add up.
Let’s dive into a few ways to build and protect generational wealth.
Homeownership
Buying a home is the best way to build generational wealth. Owning a home, as opposed to renting, provides a way to build equity and avoid the consistent rise in rent. Fixed-rate mortgages allow you to secure your monthly payment, which won’t increase like it would if you were renting. The value of your home will most likely appreciate over time, which will not only increase your resale value, but also add to your overall net worth. As a homeowner, your average net worth is much higher than it would be as a renter. On average, homeowners have a net worth of $225,000, compared to $6,300 for a renter.
Set Up A Trust
A recent survey from Caring.com stated, “only 33% of Americans have a living will or trust”. While we may not want to think about this, it’s important to have a will or living trust early because it could cost you and your family later on down the road. Having these important documents in place now will ensure a smooth transfer of your assets and protect your wealth.
Start A Business
This is sometimes easier said than done because starting a business can be a lot of work and comes with a lot of risks, but the huge positive is that it creates a legacy to pass down to your children and future generations. Once it’s passed down, your children can choose to sell the business and re-invest the money to continue creating generational wealth.
Multiple Streams Of Income
If you’re worried about the economy and inflation, having multiple jobs or ways to earn an income is a great option. This provides you with more money to invest and save for future generations. A study from Western & Southern Financial Group found “44% of U.S. residents are working multiple jobs to build wealth”. While working more might not be on the top of everyone’s radar, it has long-term effects that will help you and your family.
Building generational wealth is important for future generations, but knowing how to protect your wealth is even more essential. If you have any questions about generational wealth, how to build it, or how to protect it, reach out to us! We would love to help!
