Generational wealth is wealth that is passed down from one generation to the next. This can include money, property, businesses, and other assets. It’s important because it can help people get a head start in life and have a safety net to fall back on.
The benefits of generational wealth
Generational wealth can offer many benefits, both tangible and intangible. It can provide a source of financial stability, cushion against financial shocks, and help build long-term wealth. It can also provide opportunities for children and grandchildren to gain access to valuable assets and resources and can serve as a source of philanthropic support. In addition, generational wealth can act as a platform from which to make a positive impact on society as a whole.
The downside of not having generational wealth
The downside of not having generational wealth can be significant. For example, a family that does not have generational wealth may struggle to weather financial shocks or to afford meaningful long-term investments. Without a cushion, parents may have to work multiple jobs to support their families. Children may have to resort to debt or other forms of borrowing in order to attend college or start their own businesses. A lack of generational wealth can also lead to social exclusion. This is because those who do not have any assets may be unable to afford to participate in society or to invest in its future.
How to start building generational wealth
It is critical to have a savings plan and to start saving early. Investing in assets that will appreciate over time, such as property, stocks, and shares is worthwhile. It is also wise to consider how to pass on wealth to future generations through wills or trusts.
Impact on society
Generational wealth cannot be overemphasised. For too long, society’s focus has been placed on individual achievement. This is in contrast to the cumulative impact that successive generations of families have on society as a whole. A focus on individual success can be healthy and contribute to overall societal prosperity. Still, it can also be self-defeating if it leads to excessive levels of individualism and neglect of the collective good. Too often, the pursuit of wealth at the expense of social responsibility can lead to detrimental consequences for society as a whole.
Whilst it can significantly benefit your future generations to have something to pass down to them, you should ensure that you don’t sacrifice too much of your life, health and wellbeing to acquire this wealth. There is no point in overworking and going without when you are not seeing the benefits in the here and now.
Remember, millions of people survive just fine without wealth having wealth passed down to them.