How to create generational wealth for a growing family

Helping children and grandchildren create financial stability and lead a better life is a common goal for many adults. To set them up for success, it’s important to think about financial decisions and future implications beyond just your lifetime. Here are ways to build generational wealth and create more opportunities for your loved ones.

What is generational wealth?

Generational wealth refers to assets and resources that are passed down within families from one generation to another. These can include financial assets like money, property, investments, savings, or businesses. For example, passing down a successful family business can provide ongoing income and opportunities for younger family members.

Why is generational wealth important?

Generational wealth aims to provide a lasting legacy of financial security and stability for future generations. By accumulating and preserving assets over time, families can provide their children and grandchildren with the resources they need to thrive economically, pursue their goals, and enjoy a higher quality of life. This may include attending college, joining a family business, exploring an entrepreneurial venture, or being able to enter the workforce with more financial confidence. Additionally, sharing generational wealth can foster a sense of responsibility and stewardship among family members, encouraging them to manage and grow the family's wealth to benefit the younger generations behind them.

How to set a family up for generational wealth

Setting a family up for generational wealth involves a combination of financial planning, education, and fostering the right mindset and values. This may involve setting up a diverse portfolio, establishing an estate plan to pass those assets forward, and contributing directly toward investments that will benefit your children or grandchildren, such as their education.

Establishing generational wealth also means building financial literacy in your own lifetime and educating children about healthy money habits and how to make smart financial decisions. To set a family up for generational wealth, steps can include:

Generational investing

By investing early and creating a comprehensive financial portfolio, there can be a greater opportunity to build those savings for the future. Diversifying investments across different asset classes, and alternative investments, can help reduce risk and maximize returns. Long-term growth investments can also allow a person to take advantage of compounding interest. Even small contributions made consistently over time can grow significantly into substantial wealth.

Generational financial planning

Generational financial planning involves many of the same factors as personal financial planning, but it considers the whole family. Different things can influence financial decisions as you plan for a distant future rather than the near future. For example, preserving income by minimizing debt, living within your means, taking advantage of tax benefits, and prioritizing long-term financial security over short-term gratification can be important.

Consider meeting with a financial professional to receive guidance on creating a financial plan that includes goals for saving, investing, asset protection, and building wealth over multiple generations. You can also develop a clear plan for transferring wealth and assets while considering factors such as estate taxes, inheritance laws, and family dynamics. This can be a good time to establish a trust, create a will, and explore other estate planning tools that help ensure a smooth transition of wealth.

Helping families build generational wealth

Generational wealth can help empower families to create a lasting impact that extends beyond their own lifetimes, enriching the lives of their descendants for generations to come. Annuities and life insurance are other valuable options for passing down wealth and leaving a growing legacy behind. With proactive planning, it’s possible to create a strong financial foundation for younger generations to build upon. Then, as your children and grandchildren grow, they, too, can model healthy money habits and strengthen the family legacy through their own financial choices and endeavors.

Neither Midland National nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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