Leaving a Legacy: Your 4-Step Guide to Creating Wealth That Lasts Generations

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When you think about becoming wealthy, you likely imagine the hard work and sacrifices it will take. You’re probably also thinking about how those sacrifices will benefit future generations as you plant the seeds now to grow their wealth. But hard work is only part of the process: You’ll also need to take additional steps to secure your legacy as a provider.

By creating and implementing the right plans at the right time, you can not only create wealth but ensure that it can be passed down to the generations that come after you. While that may seem like a tall order, it’s simpler than you might think if you follow certain key steps. 

Remember, there’s no time like the present to start building a better future for the people you care about most. 

Set Up a Strong Financial Foundation 

To pass down generational wealth, you’ve got to earn it first. That’s where having a robust savings plan comes in to help build that strong financial foundation. Your budget should emphasize saving and minimizing unnecessary spending, with the ultimate goal of saving about 20% of your income. In addition to focusing on retirement through your 401(k) and traditional and Roth IRAs, you should also have an emergency fund in a high-yield savings account. 

At the same time, you should be working to reduce high-interest debt, such as credit card balances. If you know you can make your payments on time, you can also consider leveraging “good debt,” like real estate or business loans, to generate more money that you can save. 

Focus on Long-Term Growth in Your Investments 

Making the right investments can offer you and your loved ones a ladder toward future financial success — and that ladder can reach great heights, depending on your success. By working with a trusted financial advisor or broker, you can find index funds, exchange-traded funds (ETFs), or individual stocks with real long-term growth potential. 

Investing in real estate, either through rental properties or real estate investment trusts (REITs), can be another great way to  generate passive income. If you do decide to invest in rental properties, you can teach your kids, grandkids, or other important people in your life how to be effective property managers, preparing them to take over the business if you choose to pass it down to them. 

Find the Right Life Insurance Package 

When managed correctly, life insurance can be one of the most powerful generational wealth-building tools available. Since life insurance payouts are usually tax-free for your beneficiaries, they can receive a lump sum of money without worries about estate or income taxes. 

Did you know life insurance also covers more than just, well, you? It can also help cover estate taxes and debts for valuable assets like real estate, businesses, and investments, allowing your heirs to inherit these other sources of wealth more seamlessly. 

Collaborating with life insurance professionals can help you determine the best package for your goals, including creating generational wealth. 

Estate Planning 

Creating a proper estate plan can be one of the kindest gestures you do for your heirs. Your estate plan ensures you leave an equitable inheritance across multiple heirs, reducing the risk of in-fighting and other squabbles that could put cracks in the family pot of wealth. 

Trusts can also be a powerful tool for spreading wealth across generations. With a dynasty trust, you can allow your assets to grow tax-free, benefiting multiple generations. If you’re concerned about someone in your family going overboard with their spending, implementing a spendthrift trust will make it harder for heirs to indulge in reckless spending or mismanaging their inheritance. 

Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.