As the youngest Baby Boomers enter their 60’s, the largest generational wealth transfer in history – the “Great Wealth Transfer” – is now underway. A staggering amount of wealth will be passed down to the younger generations over the next twenty years. No one knows the exact number but estimates range anywhere from $60 trillion to $120 trillion and beyond.
Not surprisingly, these numbers are getting a lot of attention. Who will get it and when? Are they prepared to handle it (and how can we “help” them, for a fee of course)? How can the rest of us get in on the action?
The good news: even those of us who aren’t super rich can build generational wealth. And it’s easier than you might think.
The lean times of the Great Depression and World War II defined my grandparents’ formative years. My grandmother rinsed and reused Ziploc bags until her dying day, and leftover food was never wasted. They did their own yard work and housecleaning. Dinner out was a treat.
My grandfather taught us to always “pay yourself first.” Out of his paycheck, he’d put money into their savings, and then they’d live off the rest. Only after many years of hard work and strict budgeting did they start to relax a little about spending money.
They always had enough (even more in their later years), but you wouldn’t consider them “wealthy” in the traditional sense of the word. They helped others financially when they could but mostly enjoyed life in other ways like interacting with family and friends and volunteering in their community.
They did leave some money when they passed away to my mom and my uncle, but to us grandchildren, they handed down the value of good financial habits and an example of how to live a good life.
I learned delayed gratification as we waited for flower bulbs planted in the fall to push through the ground in the spring. I learned how to strategize and cooperate with a partner playing cards at their dining room table. I learned the importance of family gathering around the table to eat together, and of writing thank you notes to show gratitude. I saw how a family loves and cares for its aging members.
Shortly after I graduated college, my grandfather seemed surprised when he heard on the news that a woman was successfully running a local construction company. As tempted as I was to say things I might regret, I forced myself to talk respectfully to a skeptical person about what’s possible, even if they’d never seen it before. That’s a lesson I’ve never forgotten.
We tend to think of generational wealth as exclusive to the ultra-wealthy. People with names like Rockefeller, du Pont, Gates, Walton and Koch. But that’s simply not true.
Generational wealth is anything you pass down to make life for the next generation easier or better. You don’t need millions of dollars or buildings named after you to do that. Whatever helps the younger generation build a strong foundation counts – no matter how large or small.
Imagine having fewer student loans or a lower mortgage payment – or even a clue as to organize your financial life – when you first started out. How would that have helped you? With any head start, the next generation can achieve more than their parents and grandparents could even dream of. Or at least get where they want to go faster.
But whether or not you have money to give, sound values and learned wisdom are just as valuable. Demonstrating how to be a person of good character matters. Showing kindness and respect to other people matters. These things you can’t put a price on.
What will you leave to those who come after you? Consider that your most meaningful legacy might have nothing to do with money. And that’s something we can all strive for, no matter what our net worth.
