What You Need to Know About Building and Protecting Generational Wealth

You may have heard the term “generational wealth” before, but what is it exactly?

Generational wealth consists of the assets passed from one generation to the next. They can be tangible, such as cash, investments, businesses, property, and valuables, or intangible, including financial literacy and personal finance habits you’ve learned from your parents and grandparents.

What Creates Generational Wealth?

Generational wealth is accumulated gradually through financial planning and smart investments to ensure a smooth handover of assets from you to your heirs. But it’s also true that, historically, changing market conditions, such as inflation and fluctuating interest rates, have impacted different generations differently.

What is the average wealth of generations? As of 2022, Baby Boomers held 50.4% of America’s wealth, Generation X had 29.9%, and the Silent Generation retained 13.1%—leaving the Millennials with just 6.6%. That has implications for the generational wealth of Millennials, but there are ways to bridge this gap.

How Can Millennials Build Generational Wealth?

Millennials and money have a complicated relationship, with living costs and housing rising dramatically during their teens and adulthood.

Nevertheless, there’s a lot of talk of a “great wealth transfer,” where descendants of Baby Boomers and the Silent Generation will inherit many of their assets in the years ahead. Some reports estimate that 70% of generational wealth doesn’t make it past the second generation and 90% disappears by the third.

But if you’re a millennial, there are still ways you can start accumulating wealth today. Ask yourself these three questions:

1. Are You Conscious of Your Spending?

E-commerce and subscriptions are too easy these days, and there may be opportunities to limit your discretionary spending so you can save more.

2. How Can You Diversify Your Income?

Along with saving more, you can earn more with a side hustle. Leverage your skills, hobbies, and professional network into a new revenue stream.

3. Can You Launch Your Own Business?

Many Millennials have embraced freelance life. Maybe you can take it to the next level and start a company.

These are options for Millennials to consider, but there are also methods for building generational wealth that apply to anyone of any age. Here’s a look at five basics that will help you get started.