Can Anyone Create Generational Wealth?

Does the term “generational wealth” conjure up images of a kid like Richie Rich? For many people, generational wealth may seem like a handout that the “lucky” kids get and something that those in the middle class would never be able to attain.

However, it’s no secret that we all want to provide for our children and those who come after us. So how should we start thinking about generational wealth and get started with intentionally providing for those we love in any capacity we can?

How Much Money Are We Talking About?

The average form of “generational wealth” looks a lot different than most of us may perceive it. According to the National Study of Millionaires by Ramsey Solutions, just 21% of millionaires received some inheritance, with only 3% receiving an inheritance of $1 million or more. And only 16% inherited more than $100,000.

So how much money are we actually talking about when we talk about generational wealth? According to Business Insider, 20% of Americans receive an inheritance, with a median inheritance size of $55,000. However, the median inheritance size over the last three decades was closer to $15,000 and only recently increased.

What does that mean? We don’t have to be talking about millions of dollars for the support to be meaningful. In fact, in some cases, we don’t even have to be talking about dollar amounts at all. In some cases, education about wise money management can make an even greater difference in supporting your family for generations to come.

The Future of Generational Wealth

Forbes defines generational wealth as “anything with monetary value that is passed down from one generation to the next. This can include property, money, investments, and businesses. Intangible wealth is considered education, financial literacy, values and spending habits that are ingrained into your family and sometimes even your culture.”

Today, 78.1% of the country’s wealth belongs to older generations, and Baby Boomers (those born between 1946-1964) possess 52.2% of that.[1] A study from Coldwell Banker predicts that Millennials will inherit $68 trillion by 2030. A study done by the Deloitte Center for Financial Services reiterates the same, stating that over the next 15 years we can expect nearly $24 trillion to be transferred in bequests.

With that amount of money expected to be passed on over the next 10-15 years, you may even be wondering how you should prepare to potentially receive generational wealth, as well as some practical things you can do to create generational wealth for your family.

Ways to Create Generational Wealth

1) Remember generational wealth doesn’t start and end with you.

It’s easy to think of generational wealth in terms of how it affects you. But the reason why you might receive generational wealth is because someone before you got the ball rolling. If you aren’t expecting generational wealth to be passed on, you could be the one to take the first step in creating it. Even if you are unable to pass on any wealth to your children or grandchildren, the way you handle finances will lay a foundation for your heirs to build on.

2) Educate yourself and your children on wise financial practices.

Before anyone before you could pass on their wealth, they first had to have good financial practices to pull those resources together. That means setting a monthly budget, paying off debt, making a plan to fund retirement, and saving for the future. That could also mean helping your children understand wise business management practices if you’re a business owner.

3) Make smart investments.

There are many different types of investments that exist, but finding the right one that fits your unique financial situation is crucial. Meet with a financial advisor to see which types of investments are the best to help you reach your goals. To make sure your finances last beyond your lifetime, you will want to plan for retirement and even long-term care before you can consider leaving something for future generations.

If you’d like support in identifying wise investment practices, we’re here to help!

4) Make a plan to pass it on.

If you have wealth to pass on, make sure you have a plan in place to do so. This should be in your will, and the right people should be listed as beneficiaries on your investments and life insurance. (Don’t put this off!) If you don’t designate who you would like to receive those funds, the money will default to be divided up according to the laws in your state.

5) Make a plan to receive it.

If you are in a younger generation and expect to receive generational wealth, you need to start making wise financial choices now. You won’t suddenly start making wise financial choices when you receive money. How you handle it now is how you will spend any money in the future. Generational wealth isn’t the solution to your financial troubles. Instead, think of it as an accelerator. If you are making good financial decisions, an inheritance can accelerate your progress. But if you make poor financial decisions, it can speed up the severity of those poor decisions.

When considering how to create generational wealth, it’s okay to be thinking in terms of thousands rather than millions. Remember, the majority of people receiving generational wealth will be receiving around $55,000 on average.

For those of us that are taking the first step in creating generational wealth, some of us may be disheartened that we can only leave five, two, or even just one thousand dollars to our children. However, consider how you would feel if you woke up tomorrow and someone gave you $1,000. How would it affect your life? How would you feel encouraged and deeply blessed by that?

The point of generational wealth is not the amount you are able to leave to future generations; it’s about starting the process to richly bless those that come after us and give them an extra boost as they consider the legacy to leave to their own children. That is one piece of leaving a meaningful legacy!

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210 Financial is more than just numbers. The “210” in our name stands for a childhood home that represented safety, love, and family. That is what we want to provide for everyone that we care for. Welcome home. Welcome to 210.

Insurance products are offered through the insurance business 210 Financial. 210 Financial is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. AEWM does not offer insurance products. The insurance products offered by 210 Financial are not subject to Investment Advisor requirements. AEWM and 210 Financial are not affiliated companies.

Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Our firm is not affiliated with the U.S. government or any governmental agency. Investing involves risk, including the potential loss of principal. A PR firm was paid to assist with media placement. 1513840 – 10/22

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