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Growing up in a single parent household, we didn’t have much. We always he lived modestly and below our means.
When I was thirty and single, I only cared building my career. I didn’t think about my financial future, partly because of the idea retirement feel so far away I focused on short-term goals and thought that climbing the corporate ladder was the surest path to financial success.
“Show up, do your job, and someone will reward you” was my original formula for success.
In retrospect, this was short-sighted. My way of thinking about money changed completely when I had my two children. Not only did I prepare financially for the future, I wanted to building generational wealth this could change my family’s trajectory forever.
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My wife and I set out to manage our money, doing everything we could learn about personal finance. When I was 37, our net worth exceeded $1 million. My wife and I also created the website Parents’ portfoliowhere we share our experience and resources with other parents who want to achieve a similar goal.
Here’s how I’m building generational wealth right now:
1. I constantly acquire assets
One of the first steps in building generational wealth is owning an asset—something that grows in cash value or can generate income over time, such as stocks or real estate—that you can pass on to your children.
A few years ago, we began acquiring assets by investing primarily in the stock market and rental properties.
We’re big fans of low-cost index funds that track the S&P 500 because index funds are diversified, which helps mitigate risk. They can be A simple way to generate passive income through dividends.
2. I take advantage of tax saving strategies
In my 9 to 5, I make sure I use every tax saving opportunity available to me.
I always take advantage of my employer’s 401(k) matching option, for example, and contribute pre-tax dollars to a Health Savings Account.
I also invest HSA dollars, which allows for tax-free growth and withdrawal.
3. I prepare for the unexpected
I have found that building generational wealth has required me to have a clearer relationship with my own mortality.
That means we’ve talked to an estate planner and have life insurance in place, as well as a family trust. The last thing we want is for our children or their caregivers to have to deal with an additional burden of financial stress during a time of bereavement.
setting up a estate plan It gives you some control over your possessions, even when you’re gone. A family trust can provide guidance on what the money is used for, such as paying for college, making a down payment, or starting a small business.
Money can be set up to be distributed gradually over time rather than in one lump sum. And the trust can provide that the money used to fund these options must also be returned to the trust for future generations.
4. I teach my kids about money early
It is very important to us that our children build on basic financial and wealth building literacy. We make sure our children don’t see money as a lottery ticket or blank check, but as a tool that gives them access to opportunities for success.
Now that our kids are older, we’ve started giving them an allowance. We teach them to divide the bonus into five parts: giving, needs, wants, saving and investing.
Ultimately, it’s up to them how much they want to contribute to each category. Most importantly, we always remind ourselves how blessed we are, and never take what we take for granted.
Jonathan Sanchez is the co-founder of Parents’ portfoliowhere he helps readers take control of their financial future and build wealth for generations to come. Raised with humble habits and practicing wise money decisions, he became a millionaire in his 30s. Follow it Instagram and enter his newsletter at Parents’ portfolio.
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