If you are the first in your family to start generating wealth, it is up to you to educate yourself and your family. It is detrimental to your wealth creation if you are not sharing your financial knowledge and experience with your children. Here’s why, and Steps to take to build generational wealth, right now.
How wealth is typically passed down
Important Steps to take to build generational wealth – Generational wealth is usually passed down through:
- Life insurance
- Trust fund
- Family business
Being a beneficiary of a life insurance policy is another way generational wealth begins. The proceeds can be used to pay off debts or start a business.
Succession planning and taking over a profitable family business is also a means for a few Singaporeans, but the number remains far and few between.
1. Financial literacy
Teaching your children to be good stewards of their money is key to passing wealth down through generations. To put it simply: Ignorance is not bliss when it comes to money management and creating wealth.
Your kids and you should know the basics of budgeting, savings, retirement planning, and investing. You should understand the difference between assets and liabilities, and the importance of a budget (worksheet) and a good credit score.
2. Build a team that grows your wealth
Creating wealth needs a plan and a team that helps you along the way. Your financial plan needs to be adaptable, and you need to consider #children, #marriage, #divorce, #retirement, and caring for #aging parents.
Initially, you may start investing on your own or by using a robo-advisor, with no minimums and low fees. However, as your wealth grows, there will be tax implications and estate planning concerns you’ll want to address.
At some point, you will need to talk to a financial advisor, accountant, and estate planner to ensure your financial plan and investments adapt as your life changes. These are your important Steps to take right now to build generational wealth.
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