Opinions expressed by Entrepreneur contributors are their own.
“You can’t take it with you” — how often have you heard that?
It’s an oft-abused phrase employed, usually within the context of a person amassing wealth or assets beyond their needs. What it speaks to is intent, and that’s what building multi-generational wealth is all about: growing your assets to pass them on to future generations.
We’re not just talking about money and other valuable items, though. There’s far more to it than that.
Right now, in the West and throughout the world, we’re experiencing deep financial uncertainty. Especially since the crash of 2008, we’ve been on an increasingly fast treadmill of debt.
Most Millennials and Generation Z in America identified home ownership as the prime marker for success. Increasingly, though, they are being priced out of the housing market altogether. Two-thirds of non-homeowners cited affordability as why they didn’t own their own home.
There are, of course, several factors that have gone into this situation. It boils down to a total lack of focus on building generational wealth. Now we could lay that at the feet of consumerism; far too much emphasis on instant gratification, not enough on the journey of life and deferred gratification for greater future reward.
Related: Experts Share Tips on Overcoming Generational Wealth Disparity
Certainly, that’s true to an extent. We buy on credit now more than ever (I’ll get to why that’s bad…but not why you think, shortly). We seek shortcuts and outcomes rather than journeys and experiences. But as with everything in life: the answer lies in more than one factor.
Right now, we’re experiencing the perfect storm of destabilizing geopolitics, recessions, war and cultural norms that don’t favor multi-generational wealth.
We’ve cultivated this sense of wealth being about what you can demonstrate to others. It’s all about “flex” culture (as the kids say). But this belies the true nature of what it means to be wealthy.
What is wealth?
I’m not going to say something as predictable or demonstrably untrue as: “wealth has nothing to do with money.” That kind of platitudinal soundbite is also part of the problem. We’re not holding ourselves accountable for what we say publicly. Money is absolutely a component of wealth, there’s no doubt. But it also doesn’t paint the complete picture.
A “wealth” of something simply means that you have an abundant supply of it. For example, you can have a wealth of knowledge. It comes down to how resourced you are as a person and how valuable you can be as an individual to the broader community.
We’ve done ourselves a cultural disservice in emphasizing money. Not that this is some kind of anti-capitalist rant! I’m a serial entrepreneur, after all. We do, however, need to steer the conversation towards other forms of wealth to heal the current pain we find ourselves in.
Related: Health Is Wealth: How to Move Away From Hustle Culture
For multi-generational wealth, we must take a more holistic approach to life
Millions of dollars in the bank won’t serve you if you have to sacrifice your mental well-being and time with your family (or a family, for that matter) to achieve it. My vision of multi-generational wealth is not about one generation falling on their proverbial sword to bring it about.
My approach is about breaking these “molds” into which we constantly try to force ourselves. I want us to ditch the ‘cookie-cutter’ approach altogether and really examine what we have to offer future generations beyond just accrued capital.
Related: Successful Entrepreneurs Don’t Follow Mainstream Money Advice, And You Shouldn’t Either
Let’s start with money
Thanks to inflation, the money that you leave behind for your kids will be eroded by the sands of time anyway.
Our education systems throughout the west offer pitifully little education when it comes to money management. We need to start teaching our kids how to handle money properly if we want to build generational wealth.
That starts with understanding how to use debt properly!
We’re used to buying things on credit, usually having been fed the ridiculous line about how it frees up your capital to earn money. Given the rates that most retailers and third-party lenders charge, that’s total garbage.
You find me a savings account or investment portfolio that will give you the level of return that will match or exceed what they’re charging!
That said: we also need to avoid the trap of thinking that debt is inherently evil. It’s not. It just depends on how you use it.
Consumer debt (i.e., buying consumables with debt) is a terrible idea because you’re servicing debt on something that is losing value. Hence why you can leverage your capacity to service debt, for example, to become a lender yourself essentially. That’s how a lot of other successful entrepreneurs and I make a lot of money.
From an entrepreneurial perspective, educating your kids about how debt works is a massive leap toward building generational wealth.
This means educating yourself — no bad thing. I would encourage you to break the old habits and stigmas around debt for your own sake. Learn to identify the difference between consumer debt and the debt you can leverage.
The most important advice I can offer to you as an entrepreneur that will help you build multi-generational wealth is to…
Find your ‘why’!
“He who has a why to live for can bear almost any how” — Friedrich Nietzsche
This is always the first port of call for anyone I coach in business. It’s the single most important thing to teach your kids if you want them to build on your legacy.
You must understand what’s driving you and why. That takes serious introspection and hard work. You will need to weed out all the programmings you’ve been fed since you were a kid that is keeping you motivated by the desires of others.
We think that so much of what drives us comes from us. More often than not, however, we’re being driven by what someone else expects of us. When we don’t confront this proactively, it leads to mid-life crises.
The stark realization that we have less time left than we’ve had throws into sharp relief all of the things we’ve valued and how little we actually did for ourselves!
Don’t let that be the legacy you leave.
Get your head around the life that you want to lead. Be an example to future generations and build your resources (money, knowledge, health, energy, etc…) to be of maximal service.
Being of service to others ultimately builds true wealth, after all.