Many people think about building a brighter financial future for the next generation. In one sense, it's about helping them build a strong financial foundation by
What is generational wealth?
Simply put, generational wealth is money and assets passed down from one generation to another. It's more than simply cash, though; investments, real estate, family businesses and other holdings are all a part of it.
Another aspect of generational wealth is the concept of intangible wealth. It includes education, spending habits, financial literacy, contacts and more. Even though those things are hard to quantify in dollars and cents, they still have value in their transfer. Consider a relative who holds a degree from a prestigious school and has a strong network. When that status helps open doors to life and business opportunities for their family member(s) that they would not have had otherwise, that's intangible wealth.
Right now, a massive wealth transfer is currently underway. Experts estimate approximately
Why generational wealth can matter
Everyone's financial situation is different, and for some, there are more challenges than others. But even seemingly small transfers of wealth can lead to outsized results when built over time.
According to the
Not having to budget for student loans or other debts may mean they can buy a home earlier, pay off credit card debt, save more for retirement or take a chance on building a business. Those decisions can have financial influence over the long term. For many, the idea of generational wealth is to help future generations start with less debt and a leg up.
How to build generational wealth
While the ways to build generational wealth will vary person to person, you may want to consider how the following may impact your generational wealth strategy:
- Improving your financial literacy
- Investing with a diverse portfolio
- Getting life insurance
- Helping family members fund college
- Starting a business
- Building a financial team
In most cases, creating generational wealth takes a solid plan and a long time horizon. It's something you're building as part of your future legacy, which may be decades down the road, so it takes a long-term view and some dedication.

Improve your financial literacy
Creating generational wealth isn't just about owning assets and reducing liabilities, although that's certainly a part of it. It's also about building an understanding of the ins and outs of personal finance.
Financial literacy can help you as you start to learn how to build generational wealth, but in a practical sense, it can also improve your day-to-day familiarity with your finances. Many people feel intimidated by their personal finances and are too afraid or overwhelmed to ask questions, which can cause problems over time.
Instead, realize that

Build an investment portfolio
When thinking about building wealth over time, many people look to the stock market. Having a diversified portfolio balanced for your risk level early means you can have decades for it to grow, withstand market fluctuations and take advantage of compound interest.
Many people turn to their 401(k)s to start since some employers offer them as part of a benefits package. If you have an employer-sponsored 401(k), consider contributing to it. Typically, contributions come directly from your paycheck and are made before income tax is taken out, so there may be some tax benefits. Also check whether your employer matches a percent of your contributions. If they do, try to take advantage of the maximum amount they offer since that's like free money in your account.
Your 401(k) isn't your only option for investing. You can open

Invest in real estate
According to
That's why investing in real estate is a popular strategy for building generational wealth. In the most basic sense, as
Another approach is to invest in real estate. Many investors start small. They buy a multi-family home, living in one part and renting out the others to cover the mortgage and begin to build wealth. Similarly, some people own vacation homes that they rent out when they're not using them.

Consider life insurance
You may think a life insurance benefit through your employer is good enough. However, it may not fully cover your family's basic needs. It also may not be transferrable to a new job, leaving your family unprotected. If you're younger and healthy, life insurance may be one way to help build generation wealth since life insurance is usually much more affordable the earlier you start your coverage. Get started by

Start a college fund
As the cost of college has risen over the years, many people have borrowed student loans, which sometimes have taken decades to pay off in full. However, those with relatives who funded their education and avoided loans may start adulthood on a road that's a bit easier to travel.
Starting early and

Start a business
While this option isn't for everyone, another way to potentially build generational wealth is by starting a business. You can do it independently, with your family or with another outside partner. Running a family business may mean your loved ones are directly involved in the day-to-day management or will be, so it can be yet another leg up they'll have as they age. If you have any stake in a business, you can work with an attorney to set up documentation to help ensure your portion of a company gets left to your beneficiaries or that they get bought out and given the market value of your share in cash.
You don't have to open a corporation to make money from a business. The side-hustle and gig economy that exists today means you can have multiple revenue streams to both mitigate financial risk and boost your savings and wealth.

Build your financial team
While not impossible, it's hard to build generational wealth by learning about it independently. Life can get in the way and send things off track.
Gathering a team of financial experts can go a long way toward meeting your needs. They can look at your current situation and help you plan for the future. Here's who to consider adding to your team:
- Financial advisor
- Accountant
- Attorney
- Any additional specialists for when the time calls for it, such as a tax expert, estate planning attorney.

How estate planning can help pass generational wealth to loved ones
Once you start thinking about generational wealth, you'll want to consider how you will pass it down to your loved ones. That's where having your estate in order comes in. Estate planning — facilitated by an attorney — can help ease the transfer of your wealth, assets and other material goods to your loved ones after you pass. You and your attorney will work together to arrange things like making sure you have the
Once you have your estate affairs documented, it's a good idea to review them regularly. You may wish to check your will, life insurance and any beneficiary designations yearly or after a significant life event and make any necessary changes.
Discussing generational wealth with loved ones
Here are a few ways to approach talking about financial legacies:
- Start the conversation. Take the leap and mention to your parents, your children, your partner or the loved one you have in mind that you'd like to either learn about their financial goals and legacy wishes or convey yours to them.
- Have them set the pace. Come from a place of empathy and caring. Talking about the future may present realities that are hard for people to face. Let them know you want to make sure they're comfortable going over all this hard-but-necessary information.
- Keep the door open. Their plans or your plans may change, so know that it's a topic you'll revisit with updates as needed. Once you get over the initial hurdle, you may find it's easier the next time.
- Aim to take care of each other. If you approach your loved one and learn they don't have any plans in place, consider talking with them about finding a financial advisor and estate planning attorney they can pair with to get started. For your own children and beneficiaries, think about what you can do to improve their financial literacy and instill good habits.
Leaving a legacy
Building wealth over time isn't guaranteed, but it may not be as difficult as you think. It takes a solid strategy, sticking to a long-term plan and making adjustments.
Do you want to start creating a plan for your family and learn more about what is generational wealth? Connect with a