ways to build generational wealthways to build generational wealth

7 Ways to Build Generational Wealth

September 1, 2023
Family Finance

TL;DR Create generational wealth by spending less than you make, investing the rest, acquiring assets and knowledge. Transfer knowledge, assets, and opportunities to the next generation to set your family up for a stress free financial future.

Parents and grandparents often want to make sure their next of kin are taken care of financially in the long term.

Why is generational wealth important?

How can I start creating generational wealth?

Kids that grow up with less financial stress can become the best versions of themselves.

How can I pass on my wealth to my children?

How do I make sure that my child’s financial future is secure?

These are just some of the questions people have when they think about creating generational wealth.

Find wealth building strategies and examples next.

Jump Ahead:

Why it’s Important to Build Generational Wealth

Building wealth provides a financial safety net for you and your future generations.

You can set your family up to reach their financial goals and live a comfortable life.

Kids that grow up with less financial stress can become the best versions of themselves.

Generational wealth is created in many ways. Starting early is key.

Aim to give enough to set them up for a safe financial future, but not too much that they lose their drive.

Transferring wealth to children can help them become homeowners.

It can help start new businesses, achieve success in their careers, and more.

generational wealth

It reduces their overall debt, increases likelihood of achieving higher education, and increases their overall ability to build their own net worth.

Generational wealth is created in many ways. Starting early is key.

When to Start Building Wealth

Building wealth starts with you, today.

You can’t build generational wealth without getting your own finances in order.

It’s never too soon to start getting your own finances organized. Starting early gives time for compound interest to work over decades.

Start with a budget, make more than you spend, and start investing.

It’s never too soon to start getting your own finances organized.

Set a goal to learn financial education. Learn how to make money, keep more money, and long term wealth building strategies.

Continue by teaching what you know to your kids and grandkids.

Teach them about money, personal finance, and investing. Prepare them to become financially successful adults.

1) Invest in Stocks & Bonds

Investing in the stock market is one of the first steps in building wealth.

Anyone can start investing with just $20 thanks to ETFs, low fee trading, and fractional shares.

Starting to invest early gives time for compound interest to work its magic over generations.

According to recent data, a significant amount of wealth in the top ten percent of families comes from returns on investments. That’s ten times what the lower percentiles of families have in investments.

Anyone can start investing with just $20

On top of investing for your own wealth, consider buying stocks for kids.

By investing for kids, you can kickstart your little one’s financial future from a young age.

You may also spark their interest in the stock market and investing.

Choosing the right type of investment account for kids can help achieve different goals.

UTMA accounts have special tax rules. Setting up an account for your kids can help minimize taxes paid on earnings.

2) Real Estate Investing

There are two ways that you can create wealth through real estate.

The first, is becoming a homeowner yourself.

Owning your own home is a key way to building wealth. Instead of paying rent to someone else, you can pay down a mortgage the goes towards an asset you will own.

In the future, owning a home provides a legacy to be left for your kids.

Owning your own home is a key way to building wealth

The second way to create wealth through real estate is acquiring rental properties, creating passive income.

Rental properties are more assets that you can leave for your children, but that’s not all.

More than the asset itself, a rental property creates an additional income stream you can leave for your kids.

3) Start a Family Business

A family business is an asset that you can pass down to your kids and grandkids, but it’s more than that.

With a family business, you can teach your kids about business when they are young.

A family business provides jobs and cash flow for your future generations,

You can hire your kids, teaching them skills on the job for their future.

A family business provides jobs for your future generations, cash flow for the family, and potential to expand the business more and more.

Building a family business is a popular method of creating wealth used by the top one percent. In fact, seventy five percent of the wealthiest families own privately held businesses.

4) Estate Planning

Inherited wealth can play a direct role in passing down wealth.

However, if you don’t plan ahead, the tax man may take a substantial cut of your hard-earned family estate.

The process of planning how to pass on assets to your kids is known as Estate Planning.

Creating a will removes the need for courts to settle inheritance issues.

estate planning

Trusts provide an added level of control over who gets what, and under what circumstances.

To guarantee that your wealth is passed on to your kids and next generations, plan ahead of time.

5) Purchase Life Insurance

No one wants to think about the worst to come.

But a little preparation can help protect your kids and spouse for a rainy day.

Purchasing life insurance can provide your family with a financial safety net. It will help them avoid going into debt, and may even pay off a mortgage.

A little preparation can help protect your kids and spouse for a rainy day.

It may not be a direct way to build wealth, but it helps protect your family from using up all their savings.

Life insurance guarantees financial stability during unfortunate events.

It is especially recommended for new parents.

6) Gain & Teach Financial Literacy

Financial literacy plays a key role in creating and keeping generational wealth.

Learning more ways to build your financial success helps you grow your wealth. Some concepts to start with include budgeting, saving, setting goals, investing in the stock market, and retirement savings.

The world of personal finance is ever changing and evolving. Try to learn a bit more every year.

Financial literacy plays a key role in creating and keeping generational wealth.

When you have kids, it’s not enough to pass wealth on to them. You need to teach them how to manage that wealth and how to create their own wealth.

Financial literacy for kids is key in creating a lasting financial legacy.

gain and teach financial literacy

Learning financial literacy from a young age can prepare kids to handle money and other personal finance topics like budgeting, investing, building an emergency fund, and more, setting them up for a successful financial future.

You can start with fun projects like opening a lemonade stand, opening a UTMA account and buying the first stock together, or helping your kids make their own money.

Setting your kids up with a bank account is a great way to teach them about how to manage money. You can open a bank account for your kids at any age.

The more you teach your kids about money, the better you prepare them to be financially responsible adults.

7) Give Financial Gifts

You don’t need to wait for later stages of life to transfer wealth to your next generations.

You can start passing down generational wealth during your lifetime.

Giving financial gifts to kids and young adults can kickstart a bright financial future.

People are more likely to continue saving if they already have some money saved up. Monetary gifts that are saved can be used just for that.

You can support financial goals like going to college, affording a house, or paying down a wedding. These are direct ways to transfer wealth.

Giving financial gifts can build financial independence, reduce lifetime debt, and help avoid fees.

financial gifts for savings

Greatest Gift's mission is to set up kids for a bright financial future through the power of gift giving. Give gifts with Greatest Gift to encourage parents to start saving and investing for their little one's future.

More Examples of Generational Wealth

There are many more ways families can create a lasting financial legacy.

Here are more examples of generational wealth:

  • Grandparents setting up a 529 for their grandkids to help pay for a college education
  • A young couple buying their first home together
  • Parents letting an adult child stay with them without paying rent
  • Giving an interest free loan to your kids to help them make a large purchase
  • A grandmother giving a granddaughter a family jewel or a different valuable
  • Parents opening a UTMA account for their kid and teaching about investing
  • Hiring a child at the family business
  • Accruing family wealth, real estate, and assets
  • Parents creating a baby fund registry for their baby shower and investing financial gifts
  • Opening a lemonade stand with kids and teaching them about business and entrepreneurship


People define generational wealth in different ways.

They all have one goal in common – setting the next generation up for financial success.

There are many ways to create wealth.

From stocks & bonds to real estate, financial gifts, and estate planning.

Remember that building wealth and keeping wealth require different skills sets.

Invest in your financial education and in your kids’ financial education.

Make sure the next generation has the skills, tools, and knowledge to manage their wealth in the future.

Explore more ways Greatest Gift can help you save for your family's future, give & receive financial gifts with purpose.

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