How does one build generational wealth? Step one is to build some wealth of your own.
Steps two and beyond will depend upon the goals you set for the wealth that you’ve built. What will your priorities be for those dollars? Do you have philanthropic aspirations? Would you like your kids (and their kids) to receive the bulk of your wealth?
I like Warren Buffet’s take, who has said he’d like to give his kids “just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”
This Friday Feature from Linda Meltzer, a professor of business and finance with both a law degree and an MBA, was originally published on The Cents of Money.
When you envision generational wealth, do you see images of private jets, lavish parties, extra chilled martinis, and designer clothes for toddlers come into view? That may be, but this post is not about those already wealthy. It’s about people striving to build wealth and pass it to the next generation.
What Is Our Duty to Our Children?
Having and raising kids is the most challenging job in the world. As parents, you are responsible for their wellbeing, keeping them safe, healthy, supporting them in any way possible no matter how sassy and disrespectful they become as they enter their teens. Parents often have to be “perfect” in their children’s eyes and even know some magic tricks.
You want them to be happy people, respectful to others, good members of society, and financially secure.
Defining Generational Wealth
Generational wealth refers to our ability to pass our assets to our children and grandchildren as part of our family legacy. The current generation wants to leave behind family wealth as a legacy for our children, the next generation, so they have financial advantages to better themselves.
3 thoughts on “How To Build Generational Wealth”
I would add one other reason why the generational wealth might not last for generations.
Your children/grandchildren might have values, but those values might differ from yours.
Those values might not value the use (accumulation) of money in the same manner.
Yesssss – I feel like ‘teaching your children to be fiscally responsible’ is one of the most important foundational things we can do to pass on generational wealth.
After all, if our children won’t be responsible with money, it wouldn’t matter how much we pass on to them – it’ll be gone after a short while and they’ll still live in a place of high stress caused by poor financials.
Sometimes when I see quotes from people like Warren Buffet it really makes me think about if it’s actually all just a “quote” to say to people that ask. When was this quote from him given? Does he really want to give his kids just enough to make them feel like they can do anything they want but not enough to do nothing?
I did some research (5 minutes of googling) on his kids and they are all in their mid to late 60’s right now. And according to the internet have a net worth of 400 million, 2 billion, and 40 billion dollars…. So this makes me really think, when did he actually say this about not giving his kids all his money? They obviously don’t need anything from him anymore, if you can’t do “whatever you want” with 400 million dollars then something is wrong. Even if he said this quote 20-30 years ago (when he wasn’t nearly as famous for being as rich as he is today), I’m guessing his kid with the lowest net worth had at least 10 million dollars. And for someone like buffet who lives in a home he bought for sub-50k many decades ago he should know 10 million is beyond enough to try whatever you want.
Something about this quote bothers me since I see it in current news headlines when the idea of his kids needing anything more at all is just ludicrous.