3 Reasons Why You Want to Create Generational Wealth

Michael and I often talk about Return on Impact. Generational wealth can definitely be included on your bucket list and creates a generational impact. Generational wealth may have been something you have heard of but pushed it to the back of your mind because there was something more pressing to worry about at the time. Generational wealth is money that is passed down from one generation to the next. You have the ability to impact your family in ways that you do not even know yet. They would start their life without the financial burden and debt that many of us had. It comes down to having acquired assets or investing in real estate and not using the funds as part of your retirement.

Money only solves money problems, money doesn't bring happiness. Generational wealth provides you with the opportunity to solve those money problems for the generations after you. Yes, there is more than just providing the money. Families need to discuss financial responsibility and the implications of what will happen if it is lost.

Reason #1: Create some certainty when there isn’t any. COVID-19 and the lockdowns created a very scary environment for many people. Many people were nervous about their money and many were not. I would never want you or anyone in your family to be part of the group that was nervous about money during that time. Having that passive income stream creates some certainty for your finances if an emergency occurs. Generation wealth is something that can help protect your family. It can help your family during those unknown times. This black swan event isn’t going to be the last of this generation. You want to make sure that your family at least has the means of the very basics to survive.

Reason #2: Create a life that is about more than yourself. My dad is often telling me that I am a better version of who he is and that he only wants a better life than he had. I know other parents are telling their children that and I know Michael and I have discussed what we hope our future children have. You can take control of that and start something for them… even before they are born. You can create that small ripple that ends up creating a huge wave of relief for them when they are older.

Passive income is not only distributed on a monthly, quarterly, or yearly basis. It is also distributed at the time of sale, and that equates to almost half of the return (for our investment thesis). Think about it like this…. If you invest 50k when your child is born, it can potentially double to 100k by the time they are 5. If you invest that 100k back in when they are 10, it can be 200k. When they are 15, it can be 400k!! Yes, taxes and such do apply. The point is, the 50k will exponentially grow and help you save money in the long run all while potentially paying for your child’s education, first car, first house…. whatever you deem important. How amazing would that be?

Reason #3: Create financial responsibility and intelligence. It is estimated that 70% of families lose their wealth in the second generation and 90% lose it in the third! What is happening here? I continue to hear my friends say that they wished high schools discussed finances and taught courses on them. The high schools are not doing that though, so it is the responsibility of the parent or guardian to have those crucial conversations. Our children will not always carry the same goals that we have so we have to educate them on the importance of being financially responsible. Education is the key, education on the impact that can be created, education on the passions that can be pursued, education on the importance of lifelong learning.

I now witness many families including financial activities in their children’s lives. Board games are a great way to start that education at a young age. Promoting this type of education with children will only create something positive. Delegate responsibilities to everyone in the family, appropriate for every age. This will help everyone understand what it tasks to create this business, and hopefully not just see it as a fund for those luxurious items. Life does not always go as planned, so make sure you have whatever safeguards you deem necessary to try to ensure that the money is used responsibly.

Generational wealth is more than just money, it is about the long-lasting legacy you can create for your family for years to come. We cannot be rich in life if all we focus on is ourselves.

What are you doing within yourself or your family to create financial responsibility?

Until next time… Explore more. Adventure awaits.

Disclaimer: Michael and I are not a registered investment advisors, and this is not investment advice. This is just our opinion.