Building Your Wealth Legacy
Fortune published an excellent article in December about building generational wealth. If creating assets for yourself during your lifetime is challenging, building a wealth legacy to pass on to your heirs takes things to the next level.
It's not just about figuring out how to make and invest your money, which is where wealth building begins for most people. As the article explains, you have to get 3 key components right: invest early and wisely, generate multiple income streams over your lifetime, and assemble a pro team of wealth-management experts to help you manage your assets. These professionals include an experienced estate attorney, tax professional, and financial planner.
It also helps to have a high level of financial literacy, and to be able to pass this knowledge along to your children and grandchildren so they don't lose your hard-earned fortune. "Figures from GoBankingRates show that 70% of wealthy families lose their wealth by the next generation, with 90% losing it the generation after that."
Is it any wonder generational wealth is very challenging to create these days, especially with entire groups of people facing unfair income gap issues? "Disparities in pay across different racial groups play a role in each generation’s ability to build enough wealth to pass on. According to the most recent figures from the Department of Labor, Black workers earn $0.76 for every $1.00 a white worker earns."
The skills required to create generational wealth can absolutely be learned, just like anything else. With the abundance of free and low-cost online courses available online today, it's never been easier to level up your skill set and acquire skills that lead to a better-paid job. Launching your own business? There are thousands and thousands of online tutorials to help you figure it out and avoid some of the biggest mistakes fledgling entrepreneurs make. And when it comes to hiring a team of experienced wealth management experts, Google and LinkedIn are two great places to search: you can read reviews from their current clients, and get a feel for the kinds of services they offer.
It's challenging work creating generational wealth, and takes a commitment not only from you and your partner (as a side note, getting and staying married to a partner who shares your financial vision really helps), but also from your children and grandchildren to really master the art of financial literacy. It boils down to playing the long game when it comes to building wealth. If you start thinking of your family like an established, multigenerational family business, no matter how large (or small) your current assets actually are, it really helps shift your mindset about how you spend, save, and invest.
Knowing that you're helping secure your loved ones' financial futures (as well as your own) is one of the best motivations out there. You're giving one of the best gifts you could possibly give to your family: the gift of security and options in an uncertain and challenging future.
Sarah Edens is a finance educator and author specializing in the millionaire mindset and generational wealth. You can sign up for her newsletter here: Millionaire Mindset Secrets. In her free time, she enjoys hiking, spending time with her husband and rescue pets, and reading.