HOW TO CREATE GENERATIONAL WEALTH STARTING FROM ZERO: PART ONE
Depending on who you talk to, money can be a taboo topic. On our jobs and in our homes, talking about money can be a sore spot or even forbidden in some cases. However, when it comes to building generational wealth, more open communication can lead to increased wealth.
WHAT IS GENERATIONAL WEALTH?
Generational wealth is wealth that is passed down from generation to generation through property, cash, stocks, bonds, mutual funds, and any other assets that appreciate in value.
THE TIME IS NOW
Waiting to talk about money until your children become teens or young adults just may be too late. The earlier kids get an understanding of finance, the better they are at developing financial literacy skills.
Even small gestures such as giving an allowance or requiring kids to save for items they want can teach valuable lessons that will stay with children through adulthood.
So how can you build generational wealth in a family when there is no inheritance or little knowledge of finance?
Knowledge is power and there is no shame in not knowing. More than anything else, especially in these times, financial literacy is our only hope to build generational wealth.
BUILD A GOOD FOUNDATION
Just like building a home, you must start with a firm foundation; wealth is no different. Most people are unaware that having a life insurance policy for themselves, their spouse, and their children is the first building block of generational wealth. Why? Because burying someone can be costly if you are ill-prepared.
I’m sure you’ve seen people raise money through GoFundMe campaigns so that they could bury a family member who passed away unexpectedly.
Well, as one financial planner stated, “GoFundMe is not an insurance policy. We can’t rely on it to take care of the business we need to take care of ourselves.”
A life insurance policy can protect you and your family from having to empty a savings account or fall into debt due to unexpected expenses related to death. An insurance policy can also be used to ensure that your spouse and children don’t suffer long-term financial consequences if something were to happen to you.
There are many reasons why life insurance is important, but the main reason is to secure your family’s financial future. With a little research, you can find inexpensive policies that fit into your budget. In addition, you can ask church members and friends that you trust for recommendations of companies or individuals that can assist you in finding the right policies.
TEACH KIDS ABOUT MONEY
When you teach kids about money, you empower them to make good decisions as children, as youths, and as young adults. The earlier you start, the better.
As a therapist, I have come across a lot of parents who get it wrong when it comes to teaching kids values about money. Giving your children or grandchildren whatever they want without them having some “skin in the game” can be disastrous. You work hard for your money, children need to understand that (sorry for this one—my mom wore this saying out, but it’s TRUE😂) money doesn’t grow on trees!
Pay children/teens an allowance so that they can learn to save for things they want. Even if you don’t pay them an allowance, create a situation where they have to work for the things they want, because in the real world, they will have to earn money—it won’t be given to them. Outside of people who grow up with hefty trust funds—which make up less than 2% of Americans—there are no shortcuts to earning the things we want.
One of the most important things you can teach children about money is to give and save! When they receive money, teach them to set some aside. When my son was young, I taught him to tithe ten percent when he received monetary gifts or allowance money. He came to understand that his giving was going toward helping others, as I involved him in giving to our various church outreach programs. This teaches kids not to be greedy or self-centered.
Next, teach them to save for “rainy days.” It is a concept that will stick with them throughout life. Because one thing is for sure, we all have rainy days. Saving and investing will become a part of their financial lives, and not be viewed as an option.
MAKE MONEY A FAMILY AFFAIR
Even if you have adult children, you can still make money a family affair by involving your family in financial education. Establish a regularly scheduled day or evening where you get together as a family to discuss finances, such as investments, retirement, and entrepreneurship. Discuss the importance of financial literacy and develop family and individual financial goals.
I recently assisted one of my best sister-friends and her 16-year-old son with setting up a stock trading account and selecting stocks. He was wildly interested and attentive! He wanted to know about stocks, how they work, and how he could GROW his money! He already has a job, so he was ready to dive in and did.
Do you know what the beautiful thing was about my Zoom meeting with him? My sister told me that later, she overheard him sharing what he learned from me with one of his peers! And that’s how it’s done. Exposure builds knowledge and knowledge helps to build wealth.😍
In our next issue, How to Build Generational Wealth Starting From Zero: Part Two, we are going to dive into the nooks and crannies of investments and how to build wealth right now! If you are being blessed, share the info with a friend.
Happy Resurrection Sunday!
Jesus is the GREATEST generational wealth builder in history because He gave believers ETERNAL LIFE.
Until Next Time,
GROW YOU. GOD’S WAY.