7 Steps to Building Generational Wealth
Growing wealth for the next generation can be daunting, but with the right steps, you can be well on your way.
Most of the renowned businesses in the world were passed from one generation to another. The successors of these giant businesses are building on the generational wealth created by their predecessors.
If you are trying to grow your finances to save for the next generation, it may seem daunting. This is because starting and grooming a business to such a level is not a day’s work. One step at a time will help cover a million miles.
So, how should you start this journey? Here are some of the steps you can use to start building generational wealth.
Stock market investment
Although investing in stock might seem strange and intimidating, it is a means of accumulating money for a lifetime. It’s a long-term strategy for building and nurturing generational wealth as it can continue to gain value in the years to come.
If you’re new to the stock market, low-cost index funds are the ideal place to start. It comes with a low fee and long-term growth.
Real estate investment
Real estate is a stable step towards riches since it can provide consistent income flows while appreciating value over time. It’s normal to be scared by the prospect of creating a real estate empire. However, it doesn’t have to be since you can build it gradually.
You can start by getting your own house and gradually expand by purchasing one at a time. You might be amazed at how rapidly your real estate portfolio can develop if you continue to acquire homes one at a time throughout your life.
Create a business to pass down
Some of the renowned wealthy names and businesses today in Africa and the world were passed from the first generation to the current one. Hence, family businesses offer a lot of growth potential.
Although not all family businesses survive to the second generation, yours can if your hobbies and talents match your children’s. Therefore, make your children be part of the business from a young age for the best transition.
Have a life insurance
Life insurance allows you to safeguard your loved ones in the case of unexpected demise. It will also help your family overcome less-than-ideal financial situations. To know the best life insurance plan, you can consult with an insurer.
Educate your children about money management
Educating your child about money will help them know how to take care of their finances and help sustain the family businesses. From a report, 70% of families’ wealth is lost in the second generation while 90% is lost in the third generation. However, financial education often helps avert this.
If you’re interested in passing on family wealth, make it a priority to teach financial literacy to your children. This will help accumulate and safeguard generational wealth.
To start, you may buy children’s money books, teach them through activities, or demonstrate by allowing them to listen while you make financial decisions. You may even open a bank account to emphasise the value of saving for the future.
Create several revenue sources
Having numerous sources of income can help build generational wealth. An average billionaire doesn’t have one source of income but multiple sources. Out of all the options, passive income is one of the greatest.
Passive income is when you make money from your assets without putting in a lot of effort, such as rental properties, book royalties, peer-to-peer lending, among others.
Pay yourself first
Saving money for the future is essential for building generational wealth. Paying yourself first is the simplest method to save more money. For instance, you put money into savings and investments before doing anything else as soon as you are paid.
By doing this, you won’t waste your hard-earned money, and you’ll be able to save much more quickly. However, earning more money on your cash is preferable, so look for a savings account that pays interest. Also, investing part of your resources will help you increase your earnings and generate long-term wealth.
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