Generational wealth is much more attainable than you might think. It’s not just passing on a second home or a multi-million-dollar inheritance, because the term includes any financial assistance or inheritance no matter how substantial. Under this definition, something as humble as a car or as significant as college tuition is considered generational wealth.
Regardless of how much or what you pass on, doing so can benefit your kin in a variety of ways. An inheritance can make the difference between being able to pay off debt, go to college, start a business, and more, or not being able to due to lack of funds. All of these things open the door to new possibilities and the chance to amass more generational wealth for other branches of the family tree. It’s like a domino effect: When you help one generation, it gives them a better chance of being able to do the same for the next one.
Generational wealth: starting today
Get a grip on debt
Without the right strategy, debt can snowball and dig you into an even deeper hole financially. Instead of putting money away in a savings account, you’re left endlessly shoveling funds toward your debts.
For credit cards and loans, this can happen when you carry over a balance month to month or miss a loan payment. You’ll accrue more interest payments on the credit card, and lenders may charge a late payment fee on loans.
- TIP: Need a little extra room in your budget this month? General Electric Credit Union (GECU) loan accountholders can opt to skip a payment through Skip-a-Pay. We know life happens, which is why we offer this service twice per calendar year. Learn more about submitting a request here.
Sometimes, you may need help to get back on track. Professional debt management services are designed to do just that. They’ll create a budget tailored to your needs and goals and go over options that may help you secure better rates on loan products, such as credit card debt consolidation. Their goal is to give you the tools needed to lift yourself out of the debt hole, stop harassing phone calls from collectors, and avoid bankruptcy. With a clean slate, you can start focusing on building generational wealth.
Budget and save
Brainstorm what you’d like to pass down to a friend or family member. If it’s not already in your possession, such as a large sum of money, determine how much you need to save and by when. Once you know these two variables, you can break the goal down into smaller, monthly goals.
Next, create a budget. This will help you identify which spending categories, if any, to cut back in. 1 in 4 renters in 2008 spent over half of their income on housing – well above the 30% rule of thumb.1 If you can relate, housing is one category you may need to make changes in so you have more room to save. Opt for a smaller space or housing in a less popular side of town if possible.
Stocks are typically what people think of when they hear the word “investing,” but there are many different types of investments to consider. While the level of risk involved depends on which one you choose, they can help you toward your goal of building generational wealth. This is because investing essentially allows you to make money off your money through earned interest or dividends.
A stock is a unit of ownership in a company. Stockholders share in a company’s success through dividends that are typically paid out quarterly. Though sometimes riskier than other types of investments, stocks keep your assets liquid and can generate more substantial earnings.
Bonds are issued by government agencies or financial institutions. Like certificates, they have a low risk of principal loss.
Reap the benefits of deposit products
Money Market accounts allow you to earn interest on your balance based on current rates. GECU offers two types of Money Market accounts. Thrive Money Market is a tiered-rate savings account that keeps your money liquid.2 IRA Money Market is a tiered, high-interest earning and tax-advantaged account that helps grow your retirement savings.3 Both options can be opened with a deposit as low as $100.
Certificates are another enticing opportunity. This is a virtually risk-free investment option because you can’t lose your principal, or the amount you deposit upfront. Instead, you only stand to gain. Learn more about the benefits of a certificate here.
No matter what challenges you face, building generational wealth is possible with the right tools and financial partner. Let GECU be part of your strategy to help future generations. If you’re not already a credit union member, you are eligible to become one if you live, work, worship, or go to school in select counties in Ohio, Kentucky, and Indiana.