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How to Create Generational Wealth

By | April 22, 2023

generational wealth

One of the best ways to create generational wealth is to own property. Purchasing a home allows you to pass it down to future generations and sell it for a profit when necessary.

Another way to build generational wealth is to invest in the stock market. This can help protect your family’s wealth from inflation and also offer tax advantages.

Set Up a Trust Fund

If you want to ensure that your family’s financial future is secure, it’s important to set up a trust fund. A trust fund is an estate planning tool that can house your assets, and distribute them to beneficiaries as you choose.

A trust fund can be created with the help of an attorney, and you can decide how to distribute your funds as well as the trustee who will oversee those distributions. For example, you may have a trust fund that pays out a grandchild’s college expenses. You can also have a trust fund that provides an inheritance for your children, or a trust fund that enables you to donate money to charity.

When you set up a trust fund, it’s important to make sure that you understand how it works so that you can get the best results. There are three parties that will take part in a trust: the grantor, the trustee and the beneficiary.

One of the most common ways to build generational wealth is by investing in real estate. Whether it’s a single home or multiple properties, your investment in real estate will provide income for you and your family, as well as cash value that can be passed down to your beneficiaries.

Another way to build generational wealth is by investing in the stock market. While you can’t predict what will happen in the stock market, it’s a great way to generate wealth for future generations.

Lastly, it’s also important to teach your kids about money and the importance of saving and investing. This can give them the foundation they need to be financially responsible when they become adults, says Thrivent’s financial advisor, Joanne Carcone.

You can begin by teaching your kids about budgeting, saving and investing in a way that is age-appropriate for them. This will help them develop the financial literacy skills that will enable them to properly manage the money you’re gifting them later on.

If you’re interested in learning more about building your generational wealth and securing your family’s future, connect with a local Thrivent financial advisor today. They can help you create a financial plan that focuses on your unique goals and needs.

Create Multiple Streams of Income

Creating multiple streams of income is a great way to build wealth. It can help you reach your financial goals sooner, such as achieving financial independence, retiring early in Portugal or getting out of debt. It also helps you build wealth for the future, so that you can pass it on to your children and grandchildren.

Some examples of multiple streams of income include rental income, capital gains and royalties. With rental income, you earn money from your property every time you rent it out. You may have to pay a fee to manage your property, and it could take some time to earn a profit. However, once you do, your original investment will increase in value.

A popular way to create multiple streams of income is by investing in dividend-yielding stocks. This will generate a small amount of income each month, and you can use that money to invest in other companies or put it into a savings account.

Another way to generate passive income is by owning a business. This can be anything from running an online store to selling physical goods. You’ll have to spend some money up front on equipment and marketing, but you’ll eventually make a profit from sales.

You can also earn passive income by starting your own blog. Whether it’s writing about your travels, sharing your passion for fashion or reviewing products, a blog can provide you with an extra source of income.

When you start a new business, it’s important to do your research and get some advice from a professional before making any decisions. This can help you avoid costly mistakes and keep your business going strong.

Many people who earn their primary income from a job find that they’re looking for a side hustle. They want to create more money to add to their retirement funds, help them pay off debt or save for a big purchase like a house.

With a side hustle, you can earn more money in less time than it would take to work full-time. Having multiple side hustles can help you achieve your financial goals faster, and it can also allow you to live a life that’s more comfortable.

Teach Your Kids Healthy Money Habits

As a parent, you have a lot of influence on your children’s financial habits. You can start teaching them money skills from an early age and help them build a solid foundation for a life of good spending habits, saving and planning.

You can do this by modeling the behavior you want them to adopt, putting in the time and energy necessary to educate your kids about money, and communicating your message in a consistent way. This may take time, but it will pay off in the long run as your kids grow up to become financially responsible adults.

1. Teach your kids to save for items they want.

When your child wants to buy a new video game or a high-priced item, you can encourage them to save for it by setting aside a jar they can deposit their money in. You can also give them a small allowance every week in a denomination that encourages saving for short-term goals.

2. Show them the pros and cons of buying something expensive.

When it comes to buying something expensive, show your child the difference between a “money maker” and a “money loser.” They’ll get a feel for how much an item will cost in the long run and why it might not be worth the extra money.

3. Set a goal for your kids to save for a specific item.

When your children are young, you can set up a savings jar for each of their goals, such as buying a bike or a new car. You can even put a picture of the item on the jar, so they have a visual reminder.

4. Talk to them about needs and wants.

As they get older, you can expand the discussion to include earning, spending, saving and giving. They’ll learn to differentiate between wants and needs, understand how spending can deplete their savings, and know that they should save for long-term goals, like a house or a college education. They’ll also learn to wait for their big wishes, and that sometimes a small amount of time and effort can make a huge difference in the outcome.

Plan for the Unexpected

While a lot can happen in life, there are some things you can do to make sure your family is prepared for the unexpected. Planning for the unexpected can include creating an emergency fund, making a budget and setting up insurance.

You might also want to consider investing in a family-owned business that can be passed down through generations. This type of wealth is a great way to create a lasting legacy and can be tax-efficient.

For example, Thrivent clients Joshua and Annie Brown were able to open their own pharmacy thanks to the financial resources they had built up throughout their lives. Using their life insurance, retirement plans and a giving strategy they were able to open their business and create a wealth they can pass on to their three daughters.

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Another important aspect of generational wealth is teaching your children how to manage their money well so they don’t waste it on frivolous purchases. This is especially true for young people who have a higher risk of getting into debt.

It is also important to teach your children about how wealth can be used for good instead of evil. This can be done through teaching them about saving, investing and giving.

In addition, educating your children about financial literacy can help them become financially responsible adults and increase their income potential. This will help them build generational wealth in the future and ensure they don’t lose it to debt.

If you’re unsure about how to plan for the unexpected, it can be helpful to consult with a financial professional. They can help you determine your goals and recommend the right solutions to reach them.

You might also want to create a clear and unambiguous plan for your generational wealth, as this will ensure your wishes are carried out properly. A written document is also a great opportunity to discuss your vision with your family and answer any questions they might have.

Finally, it is important to remember that the unexpected will always occur. It’s crucial to be prepared for this so you can minimize any damage that may occur. Having an emergency fund, insurance and a healthy budget will allow you to avoid the stress that can come with unexpected events.