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What Is Generational Wealth and How Can I Build It? header image

What Is Generational Wealth and How Can I Build It?

For many people, financial security is about more than being able to pay bills on time. It’s about planning for the future, which includes responsibly managing debt and saving for retirement. And, if you’re a parent, it’s about laying a strong foundation for your children’s futures.

Most parents recognize that foundation includes helping your child pay for college and having a life insurance policy in place that can financially protect your children if something happens to you. By preparing for your child’s future today, you’re able to help them get a running start on their own financial future.

That’s what it means to build generational wealth: creating a solid foundation for your child’s financial success, which they can continue to build upon for future generations. When you work toward building generational wealth, you work toward creating a legacy that extends beyond your lifetime.

How to Build Generational Wealth

There are many steps you can take to start building generational wealth. Here, we outline some strategies that can help you create a strong financial foundation for your future and generations to come.

Teach Your Children About Finances

One of the challenges when it comes to building generational wealth is that you’ll have limited control — if any — over how your children will manage the assets you leave behind. That means one of the most important things you can do to create generational wealth is to teach your children about financial health and help them build good financial habits. Even if you don’t have many assets to pass on to your children, teaching them how to budget, how to manage debt and how to save money will give them a running start on securing their own financial future.

Explore Real Estate

Beyond buying a home, real estate is a long-term investment that can reap financial benefits for you today and for the future of your family. Buying a rental property (or two) can be one way to diversify your investment portfolio and be another asset you can pass down.

Give Your Child(ren) a Head Start

Student loan debt is one of the greatest financial burdens for younger generations. In 2019, about 70% of U.S. students took out college loans. By investing in your child’s or children’s education and allowing them to begin their lives with little or no student debt, you help them start strong and allow them to begin building wealth sooner. 

Invest Strategically

Investments can help you prepare for a range of life’s needs — from paying for your children’s college tuition to funding your retirement. Many employers offer retirement plans that make investing simple and can help you grow your investments more quickly by matching your contributions.

Get Life Insurance

Life insurance protects your family financially if you pass away by replacing your income so that your children and your family will continue to have the financial support they need. These benefits are paid directly to your beneficiaries, so there should be no additional costs or delays in receiving the financial benefit you’ve secured for them.

Make a Plan

Making a will ensures your assets are handled in the manner you choose after your passing. And, in many states, a will is your only means of stating who you want to act as legal guardian for your minor children if you die. Even if you're young or your estate is modest, you should have a legally valid and up to date will.

Creating a plan is very critical when you or your family owns a business. Planning ahead and managing the details of the business transition will help ensure that things are done in the most efficient way possible – helping you and your family avoid unnecessary fees and taxes. A succession plan can help ensure your business changes hands smoothly. It can also ensure that the wealth you’ve built is distributed in a way that makes the most sense for your family, even in complicated situations where one child will continue in the family business while others won’t.

Get the Support You Need

If you’re looking for someone to help you manage your wealth, or if you’re ready to get started building generational wealth for your family, we can help. Contact your local Farm Bureau agent or wealth management advisor to learn more.

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