According to a study
by the Williams Group, 70 percent of wealthy families will lose their wealth by the second generation. For those families who manage to keep their wealth through the second generation, 90 percent of those remaining families will lose it by the third generation. If you are a fan of “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy”
by William D. Danko and Thomas J. Stanley, this can be a disheartening outcome for those who achieved first generation wealth through mindfulness, hard work, and frugality.
Talking to and teaching your child about money is one method to create generational wealth. For many, this may be a challenging subject to discuss. Some people see it as impolite or largely unacceptable to truly talk about money – and end up leaving their children and grandchildren with life lessons during those crucial formative years. Others of first generation wealth deliberately decide to not tell their children about the extent of their wealth out of concern of making their offspring lazy and entitled. Sadly, this can lead to financially illiterate adults. Creating an environment where a strong work ethic and prudent financial decisions are celebrated is something a person at any economic status can share in.
Equity Trust offers educational resources families can use to develop the path to multigenerational wealth. Children can have IRAs
and participate in investments
alongside their parents. Taking the time to talk about money and investments can add financial literacy as another value you pass on to your children.