It's not how much money you make, but how much you keep, how hard it works for you and how many generations you keep it for,______robert kiyosaki.
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| how to build a lasting generational wealth |
Generational wealth isn't new concept. Maybe you have heard it more commonly referred to as "old money" or "family wealth,"
It is basically wealth that is passed down feom one generation to the next. You may also have this called family wealth or legacy wealth.
If you are able to leave something behind for your children or grand children, then you are contributing to the growth of generational wealth. In your family.
You too can leave lagacies like these between for your children.....and there children......and there children's, children. Sounds nice, doesn't it? But here will are talking about financial wealth you leave between for your family.
This is much more than an inheritance. this isn't just a nest egg gig big enough for them to live off on to it. And most importantly, how to equip your kids with the tool and know-how to sustain and build upon wealth you have created.
Every wealthy family had that one member that broke the chains of poverty for future generation."
How to build generational wealth.
1. Give your children financial literacy: it is estimated that 79% of families lose their wealth in the second generation, and 90% lose it in the third!
With statistics like that, it can seem pointless to save for a legacy of wealth. However in many cases, the loss of Generational wealth can be prevented through financial education. After all, it is easy to lose generational wealth if your kinds have no personal finance knowledge.
Before you began taking anythougth about generational wealth first and foremost, ask yourself what did they know about money.
Leaving wealth behind without the financial know-how is just like, asking your child to maintain a classic antigue car after you pass away without teaching them any mechanical skills, it is likely that the car will eventually breakdown.
To protect wealth over generations, financial learning should start in elementary schoolElementary school: it's good to teach your children the value of a dollar and the basic principal of compound interest. Elementary school age children. Had opportunities to earn money through chores, allowances and special projects, you can explained to your children that they could spend the money as they earned it, or they could invest it in a 401k, resulting in more money at a later date.
High school: help your teenage children to spend their money wisely. Teenagers should begin the habits of dividing the money they accumulate through part-time jobs, gifts from family and friends, or allowances for high school students, I suggest a basic formular of 10 Percent for saving and 40 percent for spending.
And it's also great to encourage them to pay for their own things and help them learn how to balance a checkbook.
College and beyond: help college aged children understand and avoid debt, try to impress upon children that they should save now and buy later. Not buy now and save later.
Those who understand interest, earn it. Those who don't understand interest pay it. Explained the power of compound interest to college age children and make sure they understand that it works.
2. Investing in the stock market:
When you invest in the stock market; you buy part of all of an assets, which will increase significantly with time and/or can generate an interest to you via compound interest.
For example, if you invest in ABC company, the "work" in or "seed" is your initial capital. That company then without any other involvement from you, uses your capital to generate wealth.
And because you have done your research and know that ABC company is lead by a team of geniuses, and have a durable competitive advantage in it's industry. The company can grow that initial capital at a high compounding growth rate.
If your money grows 20% each year, in just three and a half years, your money will double and if it continues to grow at 20% each year, your double money by will double again in three and a half year and so on!
3. Investing in your business:
Creating your business can turbo charge your earning power. Create recurring income and passive income for you and your family, if you have the patient to put it to work, you will reap the reward tremendously.
You can start a business around the interest, skills or talents you already have or one that compliment your purpose. The called to entrepreneurship needs no experience except commitments, but since there are competitions out there you need to adapt to changes and trends to stay on the ride.
Although not all family business make it to the second generation, it is possible that you can if your interests and abilities align with that of your children's, then it is very possible that they will want to take over the business you build.
For a chance of successful transition, you should include your child in the business from a young age. They need to know how the business operates and how to successfully continue the business
4. Invest in real estate.
Real estate is another major way to build wealth for the long-term. With the potential for steady cash flows in addiction to increasing values over time.
Let's site example from the Hilton family.
"Conrad Hilton, the creator of the Hilton empire. Was born in 1887, after his father move his family in 1854. As a boy, Conrad worked at his father's general store, at which time he began developing the entrepreneur business skills for which he is famous.
Then after a stint in the army during world war 11, Mr. Hilton purchased a 40 room hotel. The hotel was so successful, he turn the dining room into addictional hotels. And create the world's first international hotel chains-hilton hotels.
Upon his death in 1979, one of Conrad hiltons sons started his own real estate company. And the family business. In 2007, Blackstone purchased Hilton hotels for $26million.
The idea of building a real estate empire can be intimidating but it doesn't has to be! You may already waded into the world of real estate through your purchase of first home. If you continue to buy properties one at a time throughout your life. Then you can be surprised how quickly your real estate portfolio can grow.
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