Generational Wealth: Do we have enough to pass it on??
In this fastest-growing life, an individual is surrounded by so many things such as – working timelessly in workplaces, paying their taxes, and electricity bills, getting rid out of their installments, and saving for their rent just to make their survival possible. But the question arises – IS IT WORTHY? What does it take to live a worthful life? Out of all the things that comprise a worthful life, living life to pass it on to the future generation is the most important, today’s beings are not giving a single thought to it. However, The concept of Generational wealth is not something emerged overnight. It is in existence for ages.
What is Generational Wealth? Simply put, Generational Wealth is primarily wealth that passes on from one generation to another. The term “Wealth” signifies the “Assets” which can be anything- Cash, Real estate properties, investment funds, or a business. According to GObankingrates estimations, around 70% of families lose their wealth by the next generations and 90% losing it to the generation after that. Generational Wealth is important when you start everything from scratch and it works as a support system throughout the process full of risks and uncertainties. The intention behind the concept is to provide a freedom of thought from liabilities and creating an easier path for the next generation. It largely has emotional connotations. But creating wealth to pass it on, require practicality and rationality. Now the question arises “How to Create Generational Wealth?”
There are various disciplinary methods or ways for creating Generational Wealth. The very first is “Leaning the art of Saving” and stick to it throughout even after the retirement. Before moving towards the other methods, first we need to understand the challenges/ problems arises while starting or doing things rightly.
One of the biggest problem is – Differentiation in Wages – The substantial gap between wages plays an important role in the creation of Generational Wealth. The lower the wage rate the harder you should find ways to make a wealth that would last long. The higher the wage, the smoother the process would be.
Second challenge is Financial Literacy – Creating a wealth and its maintenance required an understanding which is not possible with lacking financial education.
Third challenge is Lack of Clarity – No discussions within family and heirs of wealth creates a sense of uncertainities resulted into undetermined half-baked plans. Starting the conversations is the utmost requirement.
Out of all the challenges, we had discussed the prominent ones above. Now let’s get aware of the ways helpful for the generation of long-lasting wealth.
Inculcate the Art of Investment – Don’t wait longer to start invest. Start investing as soon as possible. The disparities in wages can be reduced with investment. Investing is not only about making money but also growing it overtime. It depends on your suitabililty whether to invest in stocks or bonds or anything else like-Real Estates. A decent property in a high demanded area could prove a gentle investment.
Indulging into multiple streams of Income – Again, the wage gap can be reduced by doing multiple jobs or indulging yourself into more than one source of generating income. You would possibly have more funds/money to save & invest.
Educate yourself – One of the most important step for developing anything is to educate yourself about everything that takes to reach there. In this case, a sincere level of financial literacy is the most needed. Understanding where to invest, when to withdrawn, how to distribute, where to reinvest is impossible without financial education.
Opting for a Life Insurance Policy – A Life Insurance policy is the powerful tool of modern time. It provides a financial security to your loved ones when you are not around. Your absence can negatively affect them emotionally as well as financially. A Life Insurance Policy is something worthful to pass on.
Put everything in Words – Start indulging yourself in conversations with your family. Make it very clear & concise what things you are leaving them for. Regular meetings and discussions can solve uncertainties and confusions. It would further helpful in understanding the family’s vision for future and young heirs would also be get educated about finances.
So Creating a worthful Generational Wealth is an overwhelming process. It does provide an easier path to the next generation but it does not bleak out the fact that hardships is permanent. Each individual has its own kinds of struggles and it is the key to achieve something precious & meaningful in life.