The F Word: Generational Wealth

Generational wealth is being able to pass down assets from one generation to the next. Assets can be anything from Bonds, Shares, Real Estate and of course currency. The richest people in the world can leave their families assets to give them the best lifestyles imaginable. Individuals with very high paying jobs can leave their kids assets to help give them the best opportunities to go for the lives they dream. Working-class individuals can give their kids assets that will help them along the way to being better off financially.

I'm going to use a number system for financial statuses when it comes to this article. 3 being financial freedom, 2 being financially advanced, 1 being financially stable and 0 being financially in progress. All families have started at 0 at some point in life. Some families have done so well in achieving things for their families, (for whatever reason) that their next-generation starts at 1 instead of 0. In the world we live in, we're all aware of individuals financial statuses based on how they live and if you happen to know people in a higher financial status, they can give you an insight to the steps their family took to get them where they are. I also feel like the process of generational wealth varies in different cultures. Each culture has a different mindset on how to go about acquiring generational wealth. Time is also a very important factor in generational wealth. Different cultures take more drastic measure and sacrifice a lot for their families to be better off in the long run. 

Collective Wealth Builders:

Some cultures in western society have a lot of family members living under one roof. They vary in age but they have people in the home who generate an income. They collectively work, save and put their money together to buy properties. Each person in that household is working to buy another family member a property. So if 10 adults live in one home each adult is saving by only paying 10% of any bill in the home. That allows them to put larger amounts of their income into buying one family member a property. That family member will then move out, take some of the members with them to manage the new house and split the mortgage into however many move into the new home. This still allows them to continue contributing to putting money together to buy another family member a house. They continue to do this or even remortgage homes to help other family members acquire real estate which allows multiple members to own assets at one time. This process allows individuals to collectively get from 0 to 1. This also means that for their kids, they will be starting at 1 and will only have to focus on getting to the next level as the groundwork has already been done. Those kids can now have a better quality of living and focus more on the things they want to do and not what they have to do. That means the time it takes is faster and brings in a lot of family members at one time.

Individual Wealth Builders:

There are also other cultures where the process is more long-winded. Some cultures do things more on an individual basis. One person will work on the assets they want to acquire like property for example. They will work years to get the deposit and they will work with their partner or individually to pay for the maintenance and upkeep of the home (Mortgage included). That process means they will be the only person acquiring assets, bringing them from 0 to 1 but their children (The 2nd generation) stay at 0. The reason those kids stay at 0 is because they still have to go through the groundwork of acquiring things for themself with barely any support from their parents. Some parents tend to wait for their passing for their kids to inherit any assets instead of using those assets as leverage to put their kids in better positions. By the time the kids inherit the assets, they are usually much much older. That means they are also making the same journey from 0 to 1 instead of 1 to 2. That method creates a cycle that will continue meaning for every 1 step individual wealth builders takes, collective wealth builders take 3.

There's no right or wrong way on how to build wealth. I just want people to be aware of different methods bringing different results. If you don't have a way to individually make it big so that you can provide opportunities for your kids to get ahead, research and study ways that will allow for your kids to have a real chance of having a better way of living. Invest in your kids so that they don't have to start from the ground. Put savings away from early so that they hit targets and goals quicker and faster than you may have. The aim is to get your family in a position where they can do what they want and not what they have to for financial freedom.