What Is Generational Wealth and How Do You Build It?

When it comes to generational wealth, it’s never too late to start investing.

In the last few years, it’s been found that an increasing number of households are involved with inheritances, with over 60% of U.S. households declaring they’d received or intend to leave inheritances.

But, where does generational wealth come from? How can you build your own wealth to ensure you’re able to leave your family in a favorable position? And, most importantly, what are the best ways to build your wealth over time? In today’s post, we’re going to walk you through the basics and arm you with the information you need to make financial decisions that will benefit your family for generations to come.

What is generational wealth?

When investments, properties, and other assets are passed down, we call it generational wealth. Whether it’s a family home, a business, life insurance, stocks, or the balance of a retirement account, it’s wealth that accrues during a person’s lifetime that their family members inherit after they’ve passed.

How do you build generational wealth?

Depending on your situation, building generational wealth may seem like an impossible task. But, it’s never too late to start planning and taking steps to ensure the comfort of your family for generations to come. When we talk with our clients about strategies to build wealth, we always recommend a few things…

• Understand your finances. First, speak with a financial advisor to get a full picture of your finances. They can help you define the scope of your wealth-building strategy.
• Start paying down your debt. If building wealth is your goal, debt is your enemy. By creating a plan to pay down your debt, you can accumulate wealth with fewer obstacles.
• Build a budget and take it seriously. One of the biggest challenges involved with saving money is sticking to a budget. With a firm budget in place, you can better understand what you can afford and, more importantly, what you can’t afford.
• Set your goals. As a final step, you’ll want to set some goals. Do you want enough savings to retire? Do you want enough to send your kids to college? Enough to send their kids to college? Defining what you want helps you build a plan to get there.

How do you preserve wealth for future generations?

Once you’ve built generational wealth, it’s essential that you take steps to preserve it for future generations. From education funding to healthcare costs, if your goal is to ensure the financial security of your family, you’ll need to be smart with your money. But, what steps can you take to ensure your descendants are taken care of?

• Minimize your tax burden. Whether you’re utilizing gifting strategies or setting up trusts, reducing the amount you pay in income and estate taxes is critical to preserving your wealth.
• Set up trusts to protect your wealth. From revocable living trusts to irrevocable trusts, trusts are a great way to ensure that your assets are fairly transitioned to your family after you pass. More importantly, they can help to reduce your tax liabilities.
• Consider life insurance. If you want your beneficiaries to receive their entire inheritance, it’s important to plan for taxes. With life insurance, they’ll have an injection of income that will help to pay for any expenses – or taxes – after your death.
• Invest your wealth wisely. In most cases, it’s not enough to simply preserve your wealth, you need to continually grow it. By building a diverse portfolio of investments, you can ensure that your wealth isn’t tied up in – or tied to – any single source.

Need help devising a strategy to build wealth?

At Wiser Financial Group, we work with clients from all walks of life. Whether you’re just starting out on your financial journey or you’re retracing the steps of a journey that didn’t work out, we’re here to assist. From our WiserStart program, which aims to make it easier for people to enter the world of investing, to our full suite of financial services, our team has the tools, knowledge, and experience necessary to help you preserve your wealth.

If you’re looking to ensure the financial security of your family, we’re here to walk you through the process. We can discuss trusts, investments, insurance, and more to discover the right balance of services for your situation. So, if you’d like to sit down and start developing a strategy to build generational wealth, we encourage you to reach out to us today to learn how we can help.

Are you ready to get started?

If you’re eager to begin your financial journey, the team at Wiser Financial group is here to help.