Imagine being able to pass that down to your children and generations to come. They can keep the family business going and have a stake in its profits. Of course, not all businesses are successful and children may not want to partake in the family business. But it’s a good option to have and one that can safeguard your family financially and provide some security and tax benefits.
When it comes down to it, people who build generational wealth
than others. They spend less than they earn and set aside money for saving and investing. They choose products that help them get the most bang for their buck and aren’t susceptible to
.
Generational wealth is the passing down of assets from generation to generation. The first step you should take to build generational wealth is to create a will. A will is a legal document that states where you want your money to go after your passing. This is a key aspect of generational wealth so you can direct your money to the right place.
Think of mega-wealthy stars like
who didn’t create a will. Their millions of dollars had no clear place to go. Imagine if that money was handed down to a child, a business, or an organization.
Creating a will can ensure your hard-earned dollars go exactly where you want and serve a bigger purpose. You can create a free will using services like
or
.
One of the most important ways to build generational wealth is by protecting your family financially, even after you’re gone. As Steinem said, it’s about planning for future generations. One of the best ways to do that is through life insurance.
Life insurance provides a death benefit payout to beneficiaries after the policyholder has passed. So for example, if the head of the household had a life insurance policy of a million dollars, upon death the family would receive that amount as a payout.
The death benefit payout can be used to pay for funeral-related costs, pay off debt, and make up for any lost income. There are different types of life insurance, such as whole life insurance and term life insurance.
Term life insurance is more affordable and you purchase a policy for a term, for example, 20 or 30 years. The monthly premiums are fairly affordable.
The downside is if the policyholder outlives the term, there are no payouts. Whole life insurance can be a guaranteed way to provide assets but is more expensive. You can review the pros and cons and figure out what is best for you and your family. For term life insurance, you can check out
and
.
5. Add Beneficiaries to Financial Accounts
To make passing down assets easier, you want to add beneficiaries to your financial accounts. A beneficiary is listed as someone who can access the assets and benefits upon the death of the account holder. You can add beneficiaries to:
- Your bank account
- Your 401(k)
- Your life insurance policy
Having a beneficiary listed will ensure that money will get into the right hands and help you avoid any legal red tape or trouble.
One of the many perks of
is you can pass down a home as an asset. Imagine if you had a family home that was passed down and it was paid off and you didn’t have to pay the mortgage or any rent? You’d be able to save on your biggest expense and save and invest more money.
Aside from living in the home, you could also rent it out and
or you could sell the home. As you can see, there are various ways real estate can help the next generation build wealth.
An estate plan helps you build a financial plan and designate responsibility in the case of death or if you were to become incapacitated. Some of the tips earlier, like creating a will and getting life insurance can be part of a larger estate plan.
But estate planning can also mean naming a guardian for your children, having a medical care directive as well as designating someone who can act as a power of attorney, if you are unable to do so yourself. Having your financial affairs and estate plan in place can help build generational wealth and minimize any hassle.
Creating generational wealth requires a strategy and thinking beyond your immediate circumstances. It’s all about saving, investing, and building up assets that can be passed down. If you want to build generational wealth, take action with these seven steps so you can protect yourself financially and have your money work for you, and benefit generations to come.