What Does Generational Wealth Mean to You?

Lifestyle

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Will life be harder for the next generation? I think so. Everything was so much simpler when I was young. All we had to do was graduate from college and find a good job. After that, you just needed to save and invest to build wealth. It’s a simple formula for success. Even a penniless guy like me can become a millionaire and retire early.

Life is a lot more difficult today. RB40Jr’s higher education will cost more than 10 times what I paid. It’ll also be more challenging to get a good job. Everybody has a degree now and there is a ton more competition than in the 90s. Work and school aren’t the only issues either. The next generation will have to deal with global warming, widening inequity, job insecurity, artificial intelligence, political instability, and many more problems. Life will be a struggle for RB40Jr and his Gen Z cohorts.

Helicopter parents

I want our son to be a lot more successful than I am. That’s what every parent wants. The next generation should be better off than the previous one. Is that possible for RB40Jr? What can I do to help him succeed? This is a conundrum for all parents. My first instinct is to pass on as much wealth as possible.

This is the most straightforward answer. If we can give RB40Jr 10 million dollars, he should be set for life. Even if he can’t get into a good college or make a lot of money, he’ll have plenty of passive income to help out. Many people agree. Passing on 10 million dollars was the most popular answer in Financial Samurai’s survey – The Angst of The Not Rich Enough Class.

However, is that the correct answer? Money will help, but it won’t guarantee success. If the next generation doesn’t know how to invest, $10,000,000 can disappear very quickly. From what I read, 70% of wealthy families are no longer wealthy by the second generation. Even worse, 90% have lost their wealth by the third generation. That’s quite discouraging. Why pass down all that money if they’ll just lose it?

Maybe we should spend it all before we go.

Way of life

Meanwhile, I saw a program about the Lisu hill tribe people by Thai PBS. They live with nature and have preserved their way of life from generations ago.

One interesting segment shows how they preserve wealth for the future. After a good harvest season, they bury these melon squashes in the hills. These melons will keep until the next harvest. They can go dig them up whenever they need food. When they go to work in the field next year, they can dig one up and eat it. No need to pack a lunch. So convenient! They bury these melon caches all over the place. The host asked why don’t they put the melons in the fridge instead. The guy replied there are too many melons. The traditional way is better for their lifestyle.

The adults teach the next generation where these caches are located and how to build them. These melons will only keep for one year, but the knowledge will help the next generation survive. They feel connected to their ancestors whenever they dig up a juicy melon to eat. They also know how to preserve bamboo shoots, vegetables, meat, rice, and many other foods.

These Lisu people on the program look so happy. Hopefully, their way of life will continue to survive for many generations. Portlanders are a lot less happy than these hill people. That’s for sure. I saw over 50 people today and nobody smiled at all.

Generational Wealth

Passing down knowledge and tradition is a form of generational wealth. Do I really need to pass down $10 million to RB40Jr? I don’t think so. My parent helped me graduate college with no debt. I’m extremely grateful for that. They helped me get started in life with a clean slate. Not many kids can say that today. I’ll do the same for our son. Any inheritance will be a bonus.

I also got many good habits from my parents. I learned how to live frugally and save. That’s the foundation of my financial success. My parents also taught me a survivor mindset and optimism. They went through a lot more difficult situations than I ever did. But they always think tomorrow will be better. I’m the same way. No matter how difficult today is, just get through it. Tomorrow will be better.

I’ll pass on all these to RB40Jr. We’re teaching him to save, invest, and survive. That’s not $10 million, but it’ll help him deal with the multitude of problems the next generation will face. He’ll need to pass the RB40 way on to any future generation as well.

What does generational wealth mean to you? Will you work hard and scrimp to pass on as much wealth as you can to your kids? Or would you rather let them build their own wealth?

Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. Go check them out!

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.