Generational wealth is about more than money, and it isn’t just for the 1%.
Why generational wealth matters
As a parent, you want what's best for your children. Imagine being able to provide the freedom to pursue their dreams with the comfort of financial security. That’s the promise of generational wealth. When younger generations can start adulthood without debt or a savings crunch, they can live life more freely: Save for retirement. Pursue an advanced degree. Start a business. Put simply, generational wealth unlocks options - all while powerfully expressing your family's values and making a difference in the world.
What is generational wealth?
The term generational wealth refers to money and assets passed down from one generation to another, such as investments, real estate, family businesses and other holdings. It also includes intangible wealth such as a family’s reputation, relationships, community impact, education and values.
According to the
Even if you don’t have an inheritance coming your way, you can build generational wealth for loved ones with thoughtful planning, saving and communication.
How to build generational wealth
If you’re still decades away from passing on your legacy, here are some steps you can take right now to plant the seeds for your own family’s generational wealth.
- Start with a purpose
- Make financial literacy a family value
- Diversify your investment portfolio
- Consider life insurance
- Start a college fund
- Explore big dreams
- Create an estate plan
- Build your financial team
Start with a purpose
What opportunities do you want your children to have? How do you want to give back to your community? Why do you feel inspired to share your blessings?
Write down your answers to these questions and others that come to mind as you reflect on the meaning behind your generational wealth. Share your thoughts with your family, as you feel comfortable. Having a sense of purpose that’s larger than money will help you stay committed to your long-term goals.
Make financial literacy a family value
Like anything else, learning about finances takes time. It may feel a little intimidating at first, but there are plenty of resources to help you get started. Start with the basics like
If you have children, teach them about financial literacy in age-appropriate ways; don’t assume they will learn it in school. Use an allowance or gifts to teach young children the basics of saving, spending and donating money. Even very young children can learn values such as generosity and gratitude: involve them in charitable activities and teach them to show appreciation for gifts.
Older children should learn how to
Diversify your investment portfolio
Preparing for your retirement is key to generational wealth because it means that your adult children won’t need to financially support you. Diversifying your investment portfolio early can help it grow for decades, withstand market fluctuations and benefit from compound interest.
Many people start with
Your 401(k) isn't your only option for investing. You can open
Real estate is a popular strategy for building generational wealth because home values continue to rise. Once your mortgage is paid off, your home will be an asset with a cash value. It can be passed down to your beneficiaries and sold if they don’t need it.
Investing in real estate is another option. Many investors start by buying a multi-family home, living in one part and renting out the others to cover the mortgage and begin to build wealth. Others purchase vacation homes that they can rent out when they're not using them.
Consider life insurance
You may think a life insurance benefit through your employer is good enough, but it may not fully cover your family's basic needs. And it might not be transferrable to a new job, which could leave your family unprotected. If you're young and healthy, life insurance may be one way to help build generational wealth because it is usually more affordable the earlier you start your coverage.
Get started by
Start a college fund
One of the most meaningful gifts you can give to younger generations is the opportunity to attend the college of their choice.
Starting early to
Explore big dreams
What would you do if you could not fail? Start a business? Change careers? Found a nonprofit?
Generational wealth can come from bold decisions whose impact adds up over time, such as starting a business or pursuing an advanced degree.
For Thrivent clients Joshua and Annie Brown,2
Intangible wealth also plays a role in achieving these kinds of goals. The relationships and values of a family can be solidified through focused, intentional expressions of those values. For example, you might create generational wealth by renovating a vacation home your family can visit together or writing a book about your ancestors.
We can’t promise your bold idea will work. But with time on your side and a generational view of your future, you can take small steps in that direction while keeping the risk low.
Start a separate savings account for your big dream, give it a name that inspires you, and contribute steadily over time. Meanwhile, begin accumulating the knowledge you need to be successful: Read books and attend free seminars or networking events. Talk to people who are doing the thing that interests you and ask them what they’ve learned. With more resources and knowledge, your big dream might seem a little less big and a little more attainable.
Create an estate plan
As you start thinking about generational wealth, you'll want to consider
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.
It’s important to find the people who have the knowledge and can educate and partner with you. For us, Thrivent has provided us with education on our finances and showed us how we can work together to form a complete picture of our finances.
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
- Tax expert
- Estate planning attorney
Building wealth over time isn't guaranteed, but it may not be as difficult as you think. It also can be a powerful, inspiring way to connect with your family, align with your values and uncover a vision much larger than yourself.
Do you want to start creating a plan for your family and learn more about generational wealth? Connect with a