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When we think of wealth, we think of having lots of money. But have you ever thought about how you could build wealth for your family? For future generations? Like generational wealth?
Generational wealth refers to assets passed from one generation to the next. Those assets can include real estate, businesses, and stocks. It is usually wealth that is passed on after death in the form of inheritance. What’s interesting about generational wealth is who holds it—nearly 76% of the United States’ wealth goes to those within the top 10% of the population.
For people of color, especially African-Americans, building generational wealth isn’t easy. Due to factors such as racism and inequities, the average Black family is dwarfed by that of a white household. In a study done by Brookings, in 2019 the median white household held $188,200 in wealth—7.8 times that of the typical Black household, which was $24,1000.
The best way to begin building generational wealth is by investing in the future—children.
1. Teach Children Personal Finance
A number of people in low-income areas know little about finances. It’s one of the reasons why communities struggle financially. Statistics show that students who learn to manage their finances early often become adults who will be better equipped to live independently.
Sam X Renick, a founder of Sammy Rabbit, believes that instilling a habit of saving is important. Renick told Forbes that, “Saving teaches discipline and delayed gratification. [It] teaches goal-setting and planning. Saving stresses being prepared. Saving builds security and independence.”
Educating children on financial literacy helps continue the legacy of generational wealth. It also ensures that future generations have help in navigating their finances.
2. Invest in Education
Education is a worthwhile investment as it will give the younger generation better job opportunities. Not only that, but it can help them find what their dream is. Creating savings for college will not only protect it from certain taxes, but it can give your child a headstart in whatever they decide to do. Whether that is college or trade school, funding helps your child with any path they decide.
A key factor in building generational wealth is being able to provide opportunities for future generations to follow their passions. Which could lead to the start of more wealth-building avenues.
3. Start a Business
Starting a business is a great way to pass down generational wealth. If it is successful, it can lead to financial stability for future generations.
Though there is a possibility your child may not have any interest in the business, it still gives them something they can profit from. The business doesn’t have to be big—you can start small. Even an online business can be a great start. Whatever it is, make sure to work hard on it to ensure that it will be something to profit from.
Have any more tips on creating generational wealth? Let us know down in the comments.
This article originally published on GREY Journal.