We’re back Mommies, with Part II of the generational wealth series! Now that we are clear that it is our responsibility to teach our children about generational wealth, the next question is, who’s going to set them up for the wealth that we taught them about? You guessed it right, the answer once again is that it is OUR RESPONSIBILITY! It is one thing to teach our children how to have a healthy relationship with money, but if we are not passing wealth on to them, we cannot be sure they will acquire it. It is time we break the generational curse of scarcity and start securing our legacies. We can disrupt the wealth gap, but we must be intentional and forward thinking.
Last week, we explored the meaning of the wealth gap. Now let’s look at some statistics to further explain the reason for the wealthgap. In addition to the historical obstacles blacks have faced, according tomultiple studies, white children receive more financial support than theirblack counterparts. Based on the study, “Exploring theRacial Wealth Gap Using the Survey of Consumer Finances”,white families are twice as likely to receive an inheritance asblack families, and that inheritance is nearly three times as much. Generational wealth is not only money passed down, it is also opportunities, support,and investments to generate more money.
So, let’s talk about 5 actions we can take today to secure this legacy and Set Our Children Up for Generational Wealth
Self-care is not only about taking bubble baths, meditating, and working out. Self-care is about preserving your health which includes your financial health. If you have mountains of debt, poor credit, no savings/investments, or unhealthy spending habits, that is what you will pass to your children. Before your child can become wealthy, your financial independence is required. This is the first step to setting your children up for generational wealth.
Weare talking about building wealth, therefore having only one source of income will not cut it. Take all of your eggs out of that one basket and start spreading the wealth. It is almost impossible to depend on a 9-5 to build wealth when lay-offs, pay cuts, and unforeseen circumstances can storm through your life at any moment. Multiple streams of income not only
Life insurance is not to protect you, it is to protect your family. Life insurance is important for several reasons. The most important reason is to ensure that you do not pass on debt to your loved ones. Leaving funeral expenses, debt, and financial burdens to our loved ones must stop! If you take nothing else from this article, take this. Go get a life insurance policy ASAP! I cannot see another Go Fund Me as a substitute for life insurance. In addition to covering your debts, life insurance can leave a substantial inheritance for your family leading up to the time that you have successfully built wealth yourself.
On the personal finance scene, there is a big debate around the use of credit. Personally, I feel like credit is a necessary evil. When your child is 16 (as young as 13 with some companies), add them to your oldest credit card with excellent payment history, utilizing 10% or less of the limit, and ensure the company is reporting to the credit bureau. WARNING!!! This should ONLY be done if you are an extremely responsible credit card user. If you are not, DO NOTtake this action and see number 1 on this list immediately. Please do not ruin your child’s credit before they are old enough to ruin their own. Building your child’s credit at an early age allows them to immediately obtain business loans, an auto loan with a low-interest rate, buy a home, get an apartment, etc. If you are successful at building wealth which allows them to cash flow all expenses, they will not need credit. But, it will not hurt to have a 700+credit score at the age of 18.
I could write an entire blog post about investments and how important they are(and actually, I probably will in the future). But for now, I’ll keep it brief.
- First and foremost, you should have a retirement investment account. This will prevent you from working the rest of your life while continuing to generate passive income. Once you leave this earth, your contributions will be transferred to your beneficiaries (your family).
- Investing in property is arguably the most efficient way to build and pass on wealth. Real estate is a tangible purchase you can make that will appreciate and become more valuable over time.
- Invest in your child’s education. Now this one I am passionate about, because I have a massive amount of student loan debt that has prevented me from living my best life and also put me behind the curve of building a legacy for my child. Recent studies show that the US student loan debt is $1.5 TRILLION and black women hold $890 BILLION of this total. Whether college is necessary is debatable. But I can tell you, as a person that hires/fires in corporate America and a person whose income has tripled because of a Masters degree, having a degree opens more doors than not. Take advantage of a college savings plan at a young age and prevent your child from falling in the student loan trap that will make it difficult for them to build and pass on generational wealth.
- Stash money into low-cost investment funds for your children at a young age. Let compound interest do its thing, and your child will be set when they enter adulthood.
The transmission of wealthis often accomplished much earlier in life and in less direct ways than inheritancesduring late adulthood. Securing your family’s legacy will take intentional small steps that will make a substantial impact.Start Now! Finish Strong! And let’s Secure the bag our children will benefitfrom for generations to come. Stay tuned for the series finale “Securing Our Legacy: Who’sGoing to Prepare Our Children to Manage Wealth”.
While we patiently waitfor the finale, I would love to hear your thoughts. Were you set up financiallyfor generational wealth? Have you utilized any of these tips to set yourchildren up for wealth? Or were any of these tips utilized to prepare you toreceive wealth?
Until next time,
PS. I would love for you to follow my journey to financial freedom on Instagram.