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How to Build Generational Wealth: 6 Actionable Tips for Getting Started

Are you looking for ways to ensure that your family’s financial future is protected? Do you love the idea of building assets that your children, and generations afterward, can inherit for their own? If so, then you need to start by learning how to build generational wealth.

Imagine being able to leave a legacy for your family. Generations down the line, your wealth management tactics will leave an impression on your descendants. It’s the stuff of legends!

See below for an in-depth guide listing the actionable tips you can use to grow generational wealth for your entire family.

1. Pay Off Your Debt

If you really want to separate yourself and your family’s financial situation from the rest of the United States, then start by paying off your debt. Statistics show that the average American has $90,000 in debt.

That kind of debt is a detriment to your plans for generational wealth. The word “wealth” is described in the Merriam-Webster Dictionary as “an abundance of valuable material possessions or resources.”

Well, you can’t have an abundance of wealth when you have an abundance of debt. You don’t technically have an asset “in your possession” if you owe thousands of dollars on it.

Don’t be naive in thinking that your debt goes away when you die, either. Any debt that you have when you pass away is taken out of your estate. All of those “assets” that you’re compiling will be taken or repossessed to cover the amount of debt you had.

The good news is that your debt won’t fall on the responsibility of your children. Even if there isn’t enough money/value in your estate to cover your debt, that debt will usually go unpaid.

However, since you’re wanting to build generational wealth, you must eliminate the debt to build true wealth for your family tree.

You can use the debt snowball method to truly pay off your debt and put yourself in a position to change your family’s fortunes.

2. Invest in Assets

For those of you envisioning generational wealth as your children and grandchildren open a briefcase of $100 bills one day, think again. The truth is that most people’s wealth isn’t in the form of dollar bills.

In fact, many successful investors view stagnant dollar bills in a bank account as a failure. It doesn’t gain much value (if any) by just sitting there for years on end!

The key is to use the money you’ve been blessed with and invest in different assets. Diversifying your portfolio with different investments can help lower the risk of volatility and give your family everlasting wealth.

You could invest in the stock market by purchasing stocks, bonds, Exchange-Traded Funds (ETFs), mutual funds, and more. Since you’re playing longball with generational wealth, you can see a high return on inflation over the years.

You might also consider investing in real estate such as rental properties, flipping houses, residential real estate, commercial real estate, real estate investment trusts (REITs).

If you’re having trouble navigating it all, you’re not alone. Thankfully, you can reach out to the good people at Bogartwealth.com for investment management, financial planning, multi-generational planning, retirement planning, and more.

3. Teach Strong Financial Principles

Whether you’ve voiced your concern or not, we know what you’re thinking in the back of your mind; “What if I build all this wealth, then my child/grandchild blows it all?”

You know how the old saying goes: “Give a man a fish, he’s hungry again tomorrow; teach him how to fish, and you feed him for a lifetime.”

That certainly applies to your generational wealth. You must teach your descendants strong financial principles. Be a shining example for them. Teach them the value of setting money aside. Show them that it’s important to be happy with what you’re given.

Most importantly, show them the value (and technique) for saving money. Teach your children how to manage their finances and you’ll have more peace of mind, knowing your assets are in great hands when you’re gone.

4. Invest in Life Insurance

None of us know when it’s our time to go. Generational wealth is a tremendous goal, but remember that your family relies on right now.

It’s important to cover all your bases by ensuring that your family is financially protected in case you were to pass away abruptly.

Experts recommend that you invest in a term life insurance policy that is worth at least 10 times your current annual income. That way, your family is protected for a long time if something were to happen to you.

5. Leave a Will or Trust

You’re building all of these assets for your family now, but it’s important to specify how you’d like those assets to be distributed once you’re gone. Wills and trusts are used to plan your estate; that said, they have differences to them that you’ll want to read up on before you choose one.

To paint over it with a broad brush, wills are used to state how you want all your assets dispersed and used after you pass.

Meanwhile, a trust is used to give another party the ability to handle your assets until your beneficiaries are ready to inherit them. For example, a business owner might create a trust for their trusty family friend to handle their assets until the business owner’s kids are a certain age.

Build Generational Wealth With These Tips

Now that you have seen an in-depth guide on how to build generational wealth for your family tree, be sure to use this information wisely.

Take the time to browse our website for more articles on tips for building wealth, as well as many other topics you will find helpful.

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