Building a legacy of wealth

Often people think of generational wealth as something for millionaires and billionaires. But your last name doesn’t have to be Rockefeller or Carnegie to help give the next generation a financial leg up.

Generational wealth can take many forms, but you must position yourself to accomplish it. Here’s how.

Save money

That may sound too elementary, but it can be powerful. Oseola McCarty lived simply all her life and gave over $150,000 to the University of Southern Mississippi from money she made taking in other people’s laundry.

This is an extreme case, of course, but you can save more than you think simply by setting up a budget and sticking to it. But why simply save when you can make your money work for you?

Invest your money

Real estate is widely regarded as one of the best ways to put your money to work. Of course, you could follow a traditional method, investing in actual land or rental properties. But that is very expensive and has a steep learning curve.

If you can’t bother with learning active real estate investing, consider investing in a good Real Estate Investment Trust, better known as a REIT.

A REIT is a company that owns and typically operates real estate or related assets. Your money provides them income to invest in these properties, and you receive a return on your investment.

It looks and feels very much like a stock, but the business and underlying assets are entirely in real estate.

Of course, investing in mutual funds and exchange-traded funds is another way to make your money grow. You can do it relatively inexpensively with an online brokerage account.

Start a business 

If you would rather take a more active approach, starting a family business can help build generational wealth.

It would be wise to get your children involved in the business early. That is the road Jerry Murrell, who started Five Guys, took when he started the hamburger chain.

Just be aware starting a business is often riskier than passive investments, and only about 30% of family businesses get passed down to the next generation.

 

Start a college fund

Of course, you don’t have to build a giant nest egg to pass down to the next generation after you are gone. Simply giving your child the chance to go to college debt-free will be a tremendous economic boost.

Many states have 529 college saving plans to help you get started. Minimum contributions are usually low, and funds can be drawn tax-free for any college-related expense.

 

Teach your children about personal finance

Sometimes the greatest wealth isn’t money; it’s knowledge. We’ve all heard stories of the wealth of some millionaire getting squandered by the next generation.

Building a solid personal finance foundation for your children can help alleviate that problem.

There are many ways to approach this, but this article lays down the basic tenets of ensuring your children know how to take advantage of your efforts to build generational wealth.

So, you don’t have to be Warren Buffett to start an enduring legacy of personal wealth. You simply need a strategy and a little discipline. Then you can give a gift that can span generations and positively influence the lives of countless others.