Many people who move to the U.S. from other countries come here to pursue better opportunities for themselves and their families. A large piece of that includes financial opportunities. In some cases, it can be extremely difficult build wealth from scratch, but it isn’t impossible. Here’s how you can start making a better financial future for your family:
This article will answer the following questions about generational wealth:
What is generational wealth?
Who has generational wealth?
How do you build it?
Why is generational wealth important to my family?
What is generational wealth?
Generational wealth is any financial assets that are passed down from one generation to the next within a family. This can include things like cash, real estate, stocks and other investments, entire companies, and even financial education.
It’s true that some families have more access or familiarity with these kinds of assets than others, but building wealth for your family isn’t all about how much money you have. It’s possible to start building wealth at your own pace.
Who has generational wealth?
According to the Federal Reserve, Baby Boomer’s hold the most wealth in this country, twice as much wealth as Generation X holds and ten times as much as millennials, even though Millennials are the biggest generation in the workforce, currently.
Additionally, age-based wealth isn’t the only disparity amongst people living in the U.S. The racial wage gap is larger now than it was in 1960. Black and Hispanic families have considerably less wealth than White families in the U.S. A typical White family has eight times more wealth than a typical Black family and five times more than a typical Hispanic family, according to Federal Reserve survey results from 2019.
Although the wealth gap remains large, the typical Hispanic family is seeing fast growth in wealth since the great recession, rising by 39 percent.
How do you build it?
It’s not too late to start building equity for your family. This starts with small habits like sticking to a budget and making smart spending decisions, which anyone can learn to do.
Some practical first steps to building wealth for your family include:
- Maintain a good credit score: this will ensure you get the most competitive loans for when you are ready to buy a home or other properties
- Learn personal finance: talk to someone from your bank, someone knowledgeable (and trustworthy) in your contacts, or seek reliable online resources like Khan Academy (who also have a YouTube channel)
- Sign up for life insurance: check with your employer to see if life insurance is offered in your benefits package
- Start investing: when you feel like you are ready, you can take the next steps to buy a home, invest in stocks, or start your own business
If you aren’t in the investing stage yet, you can always work on your budget, save your money, and open a high-yield savings account. This is a normal savings account and you don’t have to do many extra steps, but you will gain interest on your money.
Whatever your financial journey may be, make sure that your assets get passed on according to your wishes, by writing a will.
Why is generational wealth important to my family?
Creating generational wealth ensures that your children and potentially grandchildren and future generations will have a better future. Having wealth to pass down can ensure they have things like a home, money for college, more business opportunities, or even just a comfortable life.
