The AI definition is “Generational wealth is generally financial assets that are passed down from one generation of a family to the next.”  These assets can include:

• Cash
• Stocks 
• Bonds
• Investments
• Real Estate
• Family Businesses
• Intellectual property, such as patents, copyrights, and trademarks 
• Charitable foundations or endowments 
• Collectibles
• Precious metals or gems

In our view, there is much more to providing generational wealth to the Next Gen than that!  Consider family values, traditions, memorable experiences and philosophies.  I lost my mom six years ago and often find myself thinking “what would Eileen do?”  There are certain traditions we honor because it has become part of family lore.  In this article we will explore both financial and values-based wealth.

Creating Financial Generational Wealth 

To build wealth, you can get lucky and experience a “windfall” like an inheritance or win the lottery.  In the financial industry we refer to these special occurrences as “liquidity events”.  For most of us it is a slow and steady process of being smart about our financial decisions. Creating wealth could be the result of the sale of a business or smaller infusions of money, like stock awards, bonuses, royalties and other sources of income.   What matters are good habits (think consistency) and lifestyle we list below. Creating generational wealth is the “long game”. 

1. Payoff debt 
2. Buy a house 
3. Start long term investing (stocks, bonds and real estate) 
4. Develop and implement an estate plan (asset titling, etc) 
5. Empower your kids, give them opportunities and financial literacy. (family meetings) 

What impacts building generational wealth? 

a. ability to save & invest wisely 

b. living below ones’ means  

c. using debt wisely 

d. marrying wisely, (yep!)  

e. becoming financially literate 

f.  honing risk management skills 

g. taking an active role in understanding and building wealth 

The Multiplier Effect

Wealth can grow exponentially over time.  Another way to think about it is…drum roll please…compounding.  For instance, we have clients who do not spend their bonus awards.  Rather they save and invest them for a variety of reasons, including college, buying a second home, helping their kids, retirement, and making sure they have a safety net for their own future.  That unspent income can then compound and build their safety net and nest-egg. 

The Non-Financial Legacy 

Creating a solid non-financial legacy involves contributing to the world in meaningful ways beyond financial wealth. It’s about how you wish to be remembered and the positive impact you want to leave behind. Here are some steps to help you create a lasting non-financial legacy:

1. Identify Your Values and Passions

· Reflect on what matters most. Spend time understanding what values and passions are most important to you. Consider what you want to be remembered for and what causes you care deeply about. 

2. Cultivate Relationships

· Nurture family bonds. Invest time in building strong, loving relationships with your family members. Share stories, traditions, and values that can be passed down through generations. 

· Mentor others.   Offer guidance and support to friends, colleagues, or young people. Mentoring can have a lasting impact and helps others grow and succeed. 

3. Contribute to Your Community

· Volunteer.   Dedicate time to volunteer work that aligns with your values. This helps build a better community and sets an example of service and/or start community projects. Initiate projects or programs that address local needs, such as organizing community clean-ups, educational workshops, or food drives. 

4. Share Knowledge and Wisdom

· Write a book or blog.  Document your experiences, knowledge, and insights in writing. This allows you to share your wisdom with others, even long after you’re gone.  Consider creating videos or recordings where you share your life stories and lessons learned. This personal touch can be a cherished keepsake for future generations. 

5. Create Lasting Traditions

· Establish family traditions. Develop family rituals that emphasize your values, such as regular family dinners, annual trips, or celebrations that promote togetherness.  Celebrate milestones meaningfully. Use significant life events (birthdays, anniversaries, etc.) as opportunities to reinforce your values and share your legacy.  Plan a trip, go camping, cook or build something together.  These shared experiences create memories for a lifetime. 

6. Build Ethical and Sustainable Practices

· Model integrity. Lead by example in your personal and professional life by demonstrating integrity, honesty, and ethical behavior. 

· Promote sustainability. Engage in environmentally friendly practices and encourage others to do the same, contributing to a healthier planet for future generations. 

7. Encourage Education and Personal Growth

· Support educational initiatives. Sponsor scholarships or educational programs that provide learning opportunities for others.  Be a lifelong learner yourself. Set an example that education and self-improvement are lifelong pursuits. 

8. Plan for End-of-Life and Estate Considerations

· Prepare a legacy letter.   Write a letter to loved ones summarizing your values, life lessons, and wishes for their future. 

By consciously considering the different ways you can create generational wealth and choosing what is meaningful to you, you can build a non-financial legacy that reflect your values, positively impacts others, and can endure through generations.

Mosaic FI, LLC is a State of Illinois registered investment adviser. The opinions expressed herein are those of the firm and are subject to change without notice due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of Jenifer Aronson and Leslie Meisner, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes July 28, 2024.