A lot of people enjoy the thought of being rich. After all, financial freedom is a fantastic feeling. However, there are far too many people that live in the “now” when they aim for true financial freedom.
They are only thinking about their immediate future. While this is brilliant and all, wouldn’t it be better if you could secure the futures of your children too? How about their children? Wouldn’t it be great if you had money to pass onto them long after you are gone? Let us introduce you to the idea of generational wealth.
In this article, we are going to give you a roadmap to building generational wealth. You may not necessarily make millions of dollars following this plan, we are confident that if you follow this roadmap and you start early, you will have money to pass onto the people you care about the most.
What Is Generational Wealth?
Generational wealth is money that will carry from generation to generation in a family. This means that the money you earn now can be enjoyed by your children, and hopefully their children. You aren’t building up cash to make a better life for yourself, but you are building up cash to help your family in the future.
Start To Earn Money
If you want to build generational wealth, then you need to have money flowing in. We won’t lie. You are going to need to work incredibly hard here.
At the very minimum, you are going to need to have a well-paying full-time job. If you want to build up serious generational wealth, then you may even want to start up your own company.
Although, this can be somewhat on the risky side. If you want true generational wealth, then you will always need to be looking for upward mobility. You need to be constantly improving your skills and looking for a better-paying job, or at least vying for that next promotion.
Many people may also consider taking up a part-time job. This will, of course, generate even more money on top of your full-time job. However, please do not take a part-time job if it is going to have an impact on the time that you can spend with your family. As brilliant as generational wealth is, it is not going to be worth it if you cannot enjoy the family that you want to be able to provide for. Memories, in many cases, can be as strong as money.
Each month, try to save as much money as you possibly can. This money will need to go directly into a savings account. The idea is that you will build that savings account up as quickly as possible. The money can then be used to invest wisely, but we will talk more about that in a short while.
At the very minimum, we suggest that you save at least 20-30% of your income each month. If you can do more, then do that. The more you save, the easier building up generational wealth will end up being.
This does mean that you will need to stick to a strict budget, but we promise you, it will all be worth it in the end. There are few greater feelings than knowing that you will have helped to financially secure the future of your children.
Pay Off Your Debts
The quicker you pay off your debts, the more money you can save each month. Paying off your debts quickly will reduce the amount of interest that you pay.
The one debt that you probably shouldn’t be paying off early will be your mortgage. There are more cons than pros when it comes to paying off a mortgage early, particularly if you have over 5 or 6-years still left to run on the mortgage.
Invest Your Money
Having cash sitting in your bank is brilliant, but this isn’t true generational wealth.
If you look at any of the richest families with generational wealth, you will quickly notice that most of them have major investments.
This may be in property. It may be in business ownership. It may be in stocks and shares.
There will be some sort of investment. Without it, you can’t guarantee the financial future of your family. Hard Truth: It may be incredibly difficult to become wealthy without investing your money.
Investments are the quickest route to accumulating masses of generational wealth. The right investments will continue to make money long after you have gone. Property, for example, pretty much always goes up in value. Once the mortgage has been paid off, rent on property will be almost pure profit.
If you do not know how to invest properly, then there will be many financial advisers that can help you out. Do not try to invest your cash if you have no idea what you are doing.
Do Not Overspend
Do you want to know the quickest way to eradicate your generational wealth? Overspending.
If you follow our roadmap, then you will have a sizeable amount of cash at your disposal. You can’t touch it. The money isn’t for you. It is for future generations.
We suggest that you come up with a budget that you stick to. Sure, you can treat yourself now and then. However, these should be small treats. It should not be anything that has a major impact on the amount of money sitting in your bank or your investments.
Teach Your Children About Finances
Generational wealth can be wiped out in a single generation. We see it happen all the time. In many cases, this is because people do not understand the importance of being financially secure.
You must teach your children how to budget and manage their finances. You will also want to teach them about how they can earn money on their own and, hopefully, continue to build upon the generational wealth that you started.
There is still no guarantee that they will not spend all of the money that you leave them but teaching them the basics of money management will reduce the chances drastically.
Sort Out the Legalities
Since you are planning on handing a rather hefty sum of cash down to your family, then you will need to have a robust will be written by an experienced lawyer.
This will make receiving your money a lot easier for your children. You do not want them to be dragged through expensive court battles, do you? You must keep the will up to date as your wealth grows.
To provide a bit more protection for your family, then you should also take out a life insurance policy. This will provide your family with a small amount of cash upon your death, and this will contribute even more to the wealth they receive. It will also give you some peace of mind knowing that your children are protected in the rare event that you pass on early.
Building up generational wealth is not going to be easy. Unless you are exceedingly lucky, this is not something that will happen overnight. You will be putting decades of work into it.
However, if you follow our plan, you will build up a nice amount of cash for your children. If you can get them into the right financial frame of mind, then they can build upon the generational wealth, and they can secure a future for their children as well.