I remember being young and my grandfather making me balance his check book. Not because he was too lazy to do it but because he knew it was important for me to learn. He also gifted me with stock and made me check on it on a weekly basis to see if I was earning money or losing money. He taught me because no one really taught him these things and we all know this is not a course offered in schools (although it damn well should be). He taught me a lot about money and how to create a budget when I was in college (though he said I didn’t have enough money to create a budget lol) but one thing no one taught me about was debt.
Once I got to college, I took out thousands of dollars in student loans to pay for my education, while I also did a work study, a part-time job, and cashed in my stock to buy school books. My mom was a single mother with two kids and often tells me that she wishes she would have been able to contribute more to my financial aid for school but I never faulted her for that because I made that choice to get an education. We didn’t know the importance of saving for the future generations coming down the line. Most of my white counterparts had parents who paid for their education or bought them property straight out of college because they were taught the importance of something called “Generational Wealth”.
What is generational wealth?
According to Fortune.com, generational wealth is “essentially any kind of asset that is passed down from one generation to the next. This might include cash, investment funds, stocks and bonds, real estate properties, or even businesses.” While this sounds like something for the wealthy, it is everyone’s right to have it. And it’s important we have it. There are many ways to start building generational wealth but I’ve listed 3 of the top recommendations below.
Three ways to start building generational wealth:
- Start Investing
Starting now with even just a few dollars can help you grow your money in the long run. Stocks, bonds, and real estate are easily transferable assets. You can also invest in a high interest yielding account but the less money you put in, the longer it will take for your money to grow. I recommend doing your research and seeking help from financial advisors.
- Develop multiple streams of income
Most people are working multiple jobs to maintain their lifestyles and with inflation on the rise, it’s still not enough to get them through. One way to develop more income is to figure out how to generate residual income. Residual income is the money you have left over after you have paid your ongoing monthly expenses like mortgage or rent, utilities, groceries, gas, etc. This extra money left over can be used for investments, savings (look for a high interest yielding account), or even for vacations. You can even look for credit cards that offer rewards and discounts like cash back, flying miles, or points.
Passive income would be another great way. Passive Income is income that you earn from little or no effort such as rental property profits. Passive income may be used to increase your residual income over time. Think of creating an e-book and selling it for $10. You get 50 people to buy your digital downloadable e-book the first week and all of a sudden, you’ve generated $500 in one week for doing the work one time! The goal is to of course bring in more money than you have going out.
- Create a legacy strategy
Most Americans today don’t have a living will or trust. Most claim that they don’t have enough money to even leave behind or cover their funeral services when they die, leaving their loved ones to cover the cost. Having a will or trust may help them gain quicker access to funds that could help cover cost and makes it much easier to transfer any assets you wanted to leave them.
If you’re able to, build a team of professionals that can help you with your property, taxes, and financial advising. These professionals can help create a trust for your beneficiaries so that everything is outlined as to where what funds are going where. Take time and think about who you would designate as a trustee and the terms in which you want them to proceed in your absence. For instance, my child would be my beneficiary but since she is a child right now and not responsible enough to take on such things, I would leave my husband and/or mom as my trustee because I know they would make sure my child did what she was suppose to do with the funds and assets I left for her. It’s important to teach my kids about how to gain and manage money so they can live a financially stable life and my hope is that one day, they will teach their kids how to do the same!