The idea of generational wealth has become extremely popular over the past couple of years. A lot of people believe they will be the ones to raise their family name out of ‘poverty’ and create a new and improved bloodline that never wants for anything but grows the family’s dominance. News flash, it’s not as straightforward as you think.

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People tend to mistake riches for wealth. A lot of people in this generation are rich. They have a good amount of cash and multiple streams of income, however, this does not equate to wealth unless it is used in a particular way. Wealth is often reserved for the few that turn their cash into appreciating assets. The wealthy own banks, not brands. They own franchises and factories. Land and property. To create and sustain wealth is no easy feat, and though the times we are living in are full of opportunity, it is not going to be as simple as you think it is to create wealth that will last generations, and here’s why.

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Firstly

The cost of purchasing appreciating assets is rising by the day. Property, stocks, land, etc, are rising because of inflation, yet for many of us, our salaries and wages are not on the same upward trajectory. Yes, many of us are getting promoted in our jobs/fields, and working harder to earn more, but the value of the money you are earning has been on a downward spiral over the past decade. This, along with many other factors, is a signifier of how much harder it will be for you to buy that house or farm you hope to leave behind for your children.

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Secondly

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Not enough thought is given to the type of lifestyle and behaviors that have to be set in place for not only yourself, but your children and their children, to appropriately inherit said wealth. Yes, you are devoted to doing all you can to attaining as many assets and stocks of cash as possible, however, you will also need to invest a great deal of thought into how you will teach your children to both handle said wealth and grow it further. You will have to think about the fact that your children will probably have to give up a significant part of their lives to continue holding the reins of whatever financial vehicle you left them. They may have to sacrifice going to ballet school, or learning architecture, all for the sake of growing a family business you hope they will be grateful for.

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It’s completely understandable to want to work so hard that others don’t have to endure the struggles that you went through, but those same struggles are what molded you into the fine specimen you are today. You might find it worth your time to think deeper about what you are doing and what it will mean for all parties involved. Many people who come from wealth will tell you it’s not always as rosy as it is made out to be, and too many of us have to go through the motions to learn that money is not everything.

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With the bit of knowledge and insight I am fortunate to have, what I would advise would be to at least accumulate some resources and finances to give your kid a relatively good childhood and enough juice to learn some skills and afford tools to help them make something of themselves. Yes, a safety net is good, but too much comfort early on in life robs a lot of people the chance to learn some important lessons for life whilst they are still fairly cheap to learn. After a certain age, most life lessons come at a very high premium.

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So just think about it.

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It could all be so simple.

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