Generational Wealth: What It Is and How to Start Building It – theSkimm
If you spend any time on #MoneyTok, you know that generational wealth is a big buzzword. But how do you take generational wealth from a hashtag to a real money goal that you can crush? Here are four easy ways you can start making money moves for yourself and your family.
First off, what is generational wealth?
It’s when you have enough wealth to pass on to future generations of your family. And not just money from a family trust. Other assets count as generational wealth, too. Think: the family business you started or the house you own.
Is generational wealth really a money goal worth working toward?
Yes. Because it helps future generations get a financial head start. Which could set up your kids, grandkids, great-grandkids, and beyond for success. Examples: Less (or zero) student loan debt because they have enough to cover college costs. Or money to make big investments because they aren’t starting from scratch.
But building up generational wealth requires a good plan and a lot of work for many Americans. Particularly women and people of color.
What challenges keep people from building generational wealth?
The hard truth is a number of systemic obstacles (like the racial wealth gap) make building generational wealth tougher for some than others. Here’s a breakdown of the challenges that created today’s generational wealth gaps.
Discrimination in the housing market has made building generational wealth through homeownership especially tough for Black families. Quick history lesson: From the 1930s to the late 1960s, Black neighborhoods were commonly labeled as hazardous areas. Which led to lots of mortgage loan denials and lower property values in low-income neighborhoods. The process, called redlining, is one reason why homes passed down in Black families have a lower value than homes passed down in white families. And while redlining was outlawed in 1968, the impact is still felt today. In 2019, a Fed survey found that Black family homes were valued at an average of $150,000…while homes owned by white families had an average value of $230,000.
A gap in savings for Blacks and Latinos also creates a challenge when it comes to generational wealth. A 2022 poll found that white adults are more than twice as likely than …….