How to Kick Start Generational Wealth

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To have wealth for the remainder of our lives, and for our children and grandchildren to come is a goal most of us would wish to achieve. Building up wealth from nothing should not have to consist of constantly struggling to save each month, living with the unknown of how you can financially secure the future of your family. 

When looking at family dynamics that have set themselves up from years prior, we often hear the phrase “old money”. Old money is a beautiful thing to see, it comes with a life of luxury, security, and a wealthy network around those select people. The question of how these people have achieved this state of living comes from the inheritance of generational money from family members prior. Essentially, one family member made it their mission to create generational wealth rather than exploit their earnings and let their wealth be short-lived. In today's society, there is an array of available information that can be the catalyst for creating this level of wealth. 

 

What Is Generational Wealth?




The meaning of generational wealth is the act of passing assets and money down from one generation to another. This can include family businesses, and real estate and it also takes into consideration the status of the family which includes the family name, reputation, and wealthy networks. All of these things hold sophisticated values that have longevity, even when passing through different generations and eras assuming that they are all maintained. In terms of how to be the first generation to start things off, here are a few things you need to know in the beginning:

 

Get Your Head in the Game




Your mindset is one of the first and most important things to have and is the right place to start the process of generating this level of wealth. It can be harder to appreciate the importance of generational wealth if you have not yet had children of your own or have a large family to be responsible for. For many people who have created generational wealth their drive to begin this line of luxury was due to the absence of security in their younger lives. Keeping the bigger picture in mind is essential to have that fire and drive to keep pushing to reach this financial goal, even when things seem like they aren't going anywhere. Never settling for less and learning from any failures is key to maintaining the slow include to success.

 

Have Diversity in Your Investments 




As mentioned, having different assets and investments in your portfolio is key if you want to be safer when investing and not risk all your money on a single investment. If you want to maintain your wealth in the short and long terms, reducing risk and diversifying your investments are one of the main factors that maintain generational wealth. 

For example, great investors would spread their investments across different strategies such as stocks and bonds, real estate, personal businesses, and many more investments that will generate returns. Of course, some investments are riskier than others, but having a balance of potential high-return short-term investments, and safer low-interest investments for long-term investments is the smartest strategy. When you are starting you shouldn't be afraid to start small. Of course, this would involve stepping outside of your comfort zone, but starting with potentially a joint venture with a trusted friend might be the place to start.

 

Aim for Passive Income 

Passive income is essentially making your money work for you. What we mean by this is your build-up on investments over time should reach the point where you can rely on them for income as well as wealth accumulation over time. Making things easy and automated will increase the chances of your wealth passing to the 2nd generation. People earn off their investments whilst not actively doing any work on them, for example, you might become a landlord for a property you own, and let a management sort all of the tenants and maintenance which therefore leaves you time to reinvest the profits. The wealthiest people make sure that their money works for them, hence why they have multiple forms of passive income which earn them profits whilst they sleep. 

They get to enjoy the income whilst the money generates itself, whereas people who work for companies as an employee do not access this way of earning. When you are working for a company during a 9-5 you are essentially trading your time for money. This might be a risk-free option, however, the problem with active income is the minute you stop working, money stops generating and you are not making any. If you wish to get to the point of having all the time to focus on building your wealth rather than the wealth of the business you are employed by, it is important to start building a passive income.

 

Safety Proof Generational Wealth




In terms of how generational wealth is preserved, there are some precautions you can take now if you are looking for a backstop or to overall protect your investments and assets from potential loss. Even individuals who have dealt with debt problems and seek IVA advice have built their wealth back, simply because they had the right contingency in place. Here are some of the more important steps people should take:

- Set up a family trust 

- Have insurance set up for example - life insurance, liability insurance, credit insurance, critical illness protection, etc.

- Estate planning 

- Make an asset protection plan 

 

Conclusion 

If you are looking to be the first of your family to become a millionaire and to share your success and wealth with generations to come, you should start the process of building this up as soon as possible. There is no time like the present, and you are never too young or old to make a change. Get your whole family involved, share your ideas, and spread the risks until you mind a combination of strategies that are stable and increase your income and assets over time. 

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