Building Generational Wealth + Teaching Generational Wealth Maintenance

Shocked! That is the word to describe how I felt after reading a research statistic that showed approximately 70% of families lose their wealth in the second generation while 90% lose it in the third generation.

Now for me – as a Black father who did not necessarily inherit generational wealth – this stat proves to show the root cause. As I am building what will be first generational wealth for my children and grandchildren, there is added pressure to do something for the first-time that is bigger than me. But now there is another added burden with how I teach my children the value of maintaining the wealth.  

MARRIAGE LIFE

The first major life lesson that made me aware of the need to build generational wealth was after I got married to my wife, La’Nyce. We were single and made a decent amount of money, but it was just us. So any debt or financial hiccups could easily be resolved by working more hours to recoup the lose money. Or so we thought. Life suddenly changed for us as we spent less time together and more time working longer hours to satisfy the desire of having more money. But we quickly noticed the impact that was having on our relationship as newlyweds.

Fast forward less than a year, we are now preparing to have our first child. We now need to think about another human being and the impact our finances will have on their life. Almost immediately, we seek a financial advisor to help create a financial plan that can guide our every decision when it comes to our money and its longevity.

Many parents will probably agree that having a child changes your outlook on many aspects of life. The things that never crossed your mind begin to dominant it. Every fleeting thought becomes about making the best decisions to ensure your child(ren) is/are comfortable and taken care of.

Another personal point is that I remember being surrounded with families where the father worked a job or ran a business while the mother stayed at home. Growing up, I only had a single mother who worked multiple and made sure my siblings and I were taken care of. So my reality was different than the one I was creating for my family. And then there was the unsettling fact that both my wife and I were working at the time. Now the question was – how would we manage to maintain our current lifestyle and build “generation wealth” if only one of us were going to be working now?

I remember when we finally had our first son, Judah. I got about a week off from work – another topic for another day, “Why do dads get less time off to care for a newborn?”. This one week was not nearly long enough to bond and adjust to the new life that our family had created. But I digress, with my wife no longer working and the key sustainer of life for our newborn, I had to dust my emotions off and get back to “where the money resides”.

PARENT LIFE

Only a few months into our new journey as parents, we started having conversations around ways to execute and enhance our financial plan. While also securing the best possible future for our small family. Every financial decision came with a consequence but how would we make the change. The first step for us was life insurance. Now both my wife and I had a life insurance policy that we were aware of. For me, I had a whole life insurance policy that my great-grandmother paid off when I was first born. My wife on the other hand, she had life insurance through the military. But I didn’t possess any additional information about it. We both felt like we needed more control, I mean this was our financial future we were talking about. So we decided to get life insurance coverage for our entire family, together. One of the best decisions that we ever made.

BUILDING GENERATIONAL WEALTH

Insurance was the foundational start because as a young, small family we had high debts and counldn’t afford large investments at that time. In the case of a tragic loss of life – the life insurance would secure as some relief financially for our family. But with the hope of living a long, healthy life, we needed to plan for the next steps to building generational wealth. This requires one to look beyond where they are and at where they want their descendants to be. Yes, retirement accounts, investing in the stock market, owning real estate, and ultimately lowering personal debt is important to achieving this goal. But even more, the education of wealth and how to maintain is key as well.

We opened separate IRAs and invested small amounts of income into the stock market. But the biggest investment was purchasing our first home and showing our daughter the power of ownership. A home that we hope to keep in our family for generations to come as an investment property. Curious to know how are you most effectively building generational wealth for your family?

TEACHING GENERATIONAL WEALTH MAINTENANCE TO OUR CHILDREN

As a millennial parent, money and sex are two topics that I find it most difficult to discuss with my daughter. Mainly because she is only four years old. Not sure how to open that doors many times – grateful for my wife. She has a better way to do it. But working hard to dismiss the notion that my daughter is a spoiled “only living” child, I work hard to teach her the value of money and how to be more generous with it. I think we must start teaching our kids as early as possible about both generating wealth and maintaining wealth. Many experts say that by the age of 10, parents should start an allowance. What age did you start your child(ren)’s first allowance? How much money did you start with?

Some 69% of parents say they are very or extremely concerned about becoming a good financial role model for their children. Could this be a results of generational trauma around financial role models? For me, it is hard to remember learning about money and wealth growing up. I know that I didn’t learn about it at school.

Sad fact: Only 17 states in the United States require high school students to take a course that teaches them about personal finances.

But do remember seeing my single-mother work to overcome the struggles of her personal finances. I can remember many “money conversations” as I called them about understanding our “wants” versus “needs” as a family. I know that personally I always seemed to spend all of my money as soon as I got it. This is still a problem that I have today. I remember so many times my mother saying to me, “Boy, that money is just burning a hole in your pocket.”

Therefore it is more important than ever before that we as parents teach our child(ren) the tough lessons about money, financial freedom, and generational wealth. It is all generational for me as I build the future, I am often reminded how I must also restore the past. How are you building the future for your descendants and reaching back to honor your ancestors? Please share below in the comments.

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