Generational wealth is a topic that many have become interested in and that’s a good thing. But the focus is largely on passing along wealth in the form of assets and savings.
But money without money management skills only leads to bigger money issues. Don’t believe me? A CNBC article reported that lottery winners are more likely than average individuals to declare bankruptcy. And just google: ‘celebrities who went broke’ to see more examples of how money without financial education (and self control) led to bigger money problems than the individual previously faced.
I’m on a mission to break generational legacies of being broke and miserable – and I’m all for creating a new legacy of wealth and happiness. But there’s no magic wand or silver bullet that will flip your family’s legacy from one to the other.
Instead, if you’re serious, you need to confront the current legacy. What did your family teach you about money? Write out everything you heard about money, what you saw and what you experienced around money? This may sound time consuming or unnecessary but it’s only by getting these thoughts and messages out of your head where you can look at them and see what messages are working against you and need to be replaced (A good start is to check out this Kiplinger article on 5 Generational Money Taboos that Must Die.)
Perhaps you grew up with the belief that people with money are selfish and greedy. That belief will get in the way of growing wealth because why would you grow wealth and become someone who’s selfish and greedy. By writing that out, you can reevaluate whether that idea is true or not – hopefully, you see that there are selfish and greedy people with money and without money, just like there are kind and generous people with money and without money.
If you skip this, those beliefs will still be running around inside of you and impacting your thinking and decisions. What’s more, you’ll pass on these beliefs in subtle ways and in that way the current legacy will continue. To be sure that similar beliefs aren’t passed onto the next generation, you need to change these old beliefs and install new, more empowering beliefs so that empowering beliefs are passed along to the next generation.
In my own life, I once had a story that I wasn’t good with money and not the ‘money type’. Thankfully, I had a few empowering experiences that helped me to change my feelings and beliefs around money.
While changing your money beliefs is important, it’s still not everything – you need financial education and so does each generation after you. While you can’t control what all of your descendents will do, you can embrace financial education and encourage your kids to embrace it as well.
Normalize talking about money and having good financial behaviors. This is important because we are heavily influenced by other people and the behaviors that seem normal are often ones that represent or even glamorize negative financial behaviors. Meanwhile, the behaviors that lead to wealth go unseen because we don’t see when people are saving and investing money.
You also need to demonstrate self control. It’s okay to want something new, but instead of reaching for your credit card, take time to consider the decision – you can institute a rule of a 48 hour cooling off period. And then if you want if after the cooling off period – set a goal and start redirecting money toward it. Depending on how old your kids are, you could share your goal with them and help them to set a goal of their own.
Setting a goal for something I wanted and then finding ways to redirect money to it was part of how I changed my feelings around money. Later I was saving for a trip to London but decided to use the funds for a trip with my nieces to celebrate their graduations. That instilled in me that money means options – I had the option to choose a different trip because I had money that I’d saved. And I think that’s what we really want, not pieces of paper or bigger numbers on our bank accounts (though they can be reassuring at times). We want what money can bring.
Passing along savings and assets can be beneficial and it’s great that more people are thinking this way. But to really change our current legacies and pass on generational wealth, first we need to pass on better beliefs, Financial Education and self-discipline – that’s the recipe for a new legacy.