Most people want to gift their loved ones with financial security and stability, but the idea of building generational wealth may be intimidating at first. According to the Department of Financial Protection & Innovation, there are five key strategies to begin establishing a healthy wealth portfolio:
- Pay off debts. Map out current finances and create a budget/payment plan to pay off credit cards and personal, car, or student loans to avoid additional interest costs.
- Buy a house. An inherited home prevents the need for loved ones to rent, lease, or secure a full-price mortgage. Also, the value of a home often increases over time and builds equity.
- Begin long-term investing. Long-term investments generate interest over several years – even decades – and compound growth. They are also often taxed at lower rates than short-term investments.
- Pass on financial wisdom. Teaching your children how to responsibly handle finances is just as important as creating generational wealth. Share your knowledge about budgeting, investing, etc. early on for their future success.
- Create a wealth transfer plan. Having a clear succession plan in place prevents expensive probate cases for your loved ones and ensures your hard-earned investments go directly to them.
With a developed wealth portfolio in place, the wealth transfer plan is crucial for protecting the generational wealth you have created. For wealth transferring, experts recommend first cataloging your assets and liabilities and considering which beneficiaries will receive what, then creating wills or trust funds for each, completing all legal documentation for each, and updating your plan every three to five years or as circumstances change.
Examples of Generational Wealth:
Financial wealth (money, savings, investments)
Assets (house, real estate, collectables, precious metals/gems)
Business ownership
Intellectual property (patents, copyrights, trademarks)
Charitable foundation or endowment
Meet the Author
Abby Callahan, BA
Abby Callahan is a graduate of the University of Tennessee at Chattanooga (UTC), where she earned a Bachelor of Arts in English with a minor in Spanish and the distinction of Cum Laude. She also graduated Magna Cum Laude from Chattanooga State Community College, earning honors through the Global Scholars Honors Program. Prior to joining CMC Media & Marketing Group as editor/digital content specialist, Abby successfully fulfilled roles in marketing and event planning, as well as strategic communications and storytelling for a wide variety of initiatives. Today, Abby leads ideation, conceptualization, and development of numerous health, wellness, business, sports, and lifestyle articles published in print and online for HealthScope®, CityScope®, and Choose Chattanooga® magazines – premier publications serving S.E. Tennessee and North Georgia.
