#1 Way To Create GENERATIONAL WEALTH Even If You Weren't Born With It
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- เผยแพร่เมื่อ 27 เม.ย. 2023
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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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I inherited over 500k when I was 47 just after I had paid off all my debt. I had educated myself when I was trying to pay off 40k of debt. Upon inheriting I decided it was my job to be a steward of the money and invest the funds in a manner that my late father would approve of. I have been saving in a 401k and Roth IRA at work since age 23. Despite having to take RMD's, the inheritance has grown, and it has helped pay a little for college for grandsons. It just so happens my income at work is higher so I can save and invest and I don't need the inherited money for much so far. The inheritance will double before I retire, and again during retirement. Later, I also inherited 500k from my mother so it was added to what I inherited in total. I think my parents would approve but money is only one small part of life. I can say what is most important is the people and experiences together after you establish a basic level of financial security. In fact in poverty or wealth the most important thing is your family and close friends.
Excellent Video! If you grow up poor, there is no financial education. The only thing you learn is what you can’t do! Other than teaching them right from wrong, teaching about finances is the greatest gift you can give them. You can save them from spending half their life learning it on their own. Teaching them to take responsibility for themselves and theirs should be the goal for any parent.
My parents began 'gifting' me annually my future inheritance near the end of their lives. The first few years of this gift, I paid off all my credit card and other loans to essentially become debt free (with the exception of my mortgage). Other years I invested every penny and have not touched it since. My folks also placed their entire estate in a Trust which was passed down to me and other siblings. I invested all of that as well. When I retired I purchased a few things but 90% of it is still invested.
Wanting to avoid probate if we die unexpectedly. Don’t want to pay taxes. Don’t want to sign money and house over to a personal care home. Great channel
I gave my oldest daughter a home after her husband got out of the military. My grandsons have had a stable place to call home ever since. My daughter was able to be a stay at home mom until a few months ago when she decided the boys are old enough for her to be able to work.
I gave my daughter a great gift but it wasn't cash that she could easily spend. I'm doing the same thing for my son. Both felt rich in the beginning due to people commenting how lucky they are to get an inheritance early. But life quickly puts them in their place.
My youngest daughter who is 19 years old has received a trust from grandpa. She plans to buy a home at age 25. I'm hoping that money is spent well. Fingers 🤞.
My friend left some money to people I knew: One guy got $25K: He was put off bc it didn't change his life as he was already wealthy. The other friend got only $15K. But it changed his life!! He was more happy and improved his relationship with his children. Now me? Well, there is that Bible verse: A good man leaves an inheritance to his children's children. Hope this makes you smile!
Hi Erin, great video! My parents never talked about their finances, but my mom started a bank account for me with $5 when I was 5 yrs old and my dad got me started in coin collecting, which my collection now is worth about 10 grand. So learning early on about money and different aspects of money has made a huge difference in my life. And being able to give to my church and different charities is very rewarding! Have a blessed weekend! 😊
My Grandma did a similar thing and bought Intel Stock that I could access when I was 18. I sold it to help pay for college. It was only a couple thousand dollars, but I still wish I would have held onto it to get the dividends!
My parents never really worked with me or discussed money with me.
I'm currently working with my daughter. She's 12 and asking questions. I'm planning to start her a Roth IRA and a online brokerage account as soon as she starts working. Every dollar she invests in the brokerage account I'll match in her Roth IRA.
This way she has to put in the work to reep the rewards and develops that the skills and "muscle memory" for investing. When she gets out of college she'll hopefully be good to go.
I have heard that if you put $10,000 in the S & P 500 etf, it will grow to a million dollars or so in 50 years. I have heard it often enough, that I assume its true. It seems like parents should be preparing their children for their retirement rather than a college fund.
Yes, $10,000 invested for 50 years; would need an average of 9.64% growth per year. It would result in over $1 million dollars.
NerdWallet and MoneyChimp websites have great compounding interest calculators. You should check them out and try out different calculations
When my father died, his 3rd wife got all of his estate ~$1M ... he never was one to plan or understand finances..nor did he have a Will. Generational wealth don't happen without a Will, and removing multiple spouses from the equation. ALSO, one should never plan on receiving generational weath .. there is no guarenttee.
My mom's motto was Why save it? Money is meant to be spent. and What are you going to do with it when you are dead?
She also retired at $8/hr and $20k in 401k which she spent in the first few years. She's not sure how. Just remembers a cruise for her and her college roommate. My dad's Navy pension and $500/month SS gets her by.
I was introduced to budgeting by Dave Ramsey when I was in my early 30s with as much consumer debt as my annual salary. You could say I had a huge learning curve. 😅
4:03 Heck yeah!
My sister is much like the other 3 in your story whereas I'm more on the same page as you. Guess that's why I keep watching the channel. Keep up the great info.
Time and time again I have seen cases in which young people get too much money too soon and it undermines their motivation in deep and profound ways. You probably don’t want to deny your children the opportunity to feel accomplished and self-reliant. Self-respect is gained when you learn to support yourself.
My life would have been so much different if my mom had your mom's mindset. However, she never developed financial knowledge, and I didn't learn about personal finance until just a few years ago well in to my mid-forties. My wife's and my future is much brighter as we close in on 50 with nearly all of our non-mortgage consumer debt paid off and a goal to get the house paid off in the next 4 years, all while investing at least 15% of our income into our retirement account. However, the real legacy we'll leave is breaking the cycle of generational poverty and teaching our kids and grandkids to be wiser than we were when we were younger.
I am trying to get my grandchildren interested in saving and investing. They are 19 years old. Please do a show on how to get children or young adults who are poor interested in saving and investing so that you can pass down the generational wealth
Love that idea!
My mom was also the person who taught me about handling money. I have so much gratitude for all my parents taught me!
I do a monthly review of our finances and my 5yo has watched me nearly every time. During a family get together earlier this year, he was gifted about $10. He was asked what toy he was going to get and he turned to the family member and said, "I'm not getting a toy; I'm going to invest it." That family member gave us biggest confused look. I promptly doubled it and put it in an index fund. 🥲
Great advice again. Educating your kids is so valuable. Absolutely as a parent don't expect the schools to teach this. In Jr. High school, I would let my kids write out checks, and they all learned what everything cost I would then say okay times that by 12 and that is what it costs per year. I would show them the transfer information into their college funds, and I always matched whatever they could earn for their Roth accounts. This got them all started at around age 12. Now that they are in their mid 20's they all report to me that they have added their 5000.00 for the year. I don't have the heart to say okay I don't need to know anymore. :)
Give a man a fish and feed him for a day, teach a man to fish and feed him for a lifetime. Erin's mom and grandma did the right thing early, and now she's not even 40, sharing all this knowledge, and a good way toward her goals... Take her free advice! 🙂
Great video. We never had children and my wife passed away almost two years ago. I don’t want to fund my dead beat relatives so I set up a trust giving the most in need a small amount. I am not giving anything to the ones who don’t need it. The rest of my estate is going to the Humane Society.
I opened brokerage accounts for all my kids (4), they have checking and savings accounts, 529 plans and my oldest is an authorized user on 2 of my CC cards- have to be 13 or older. Once they start working I plan on opening an IRA account for them. I'm trying to set them up for success. Its not easy on one income. I can't wait until they start working.
13 years old is AMEX’s requirement. Others might have older limits, but many have no age restrictions.
My only true inheritance was $5,000 from my grandmother, when I was in my mid 30's. I was financially educated yet, I lost it all in Global Crossing stock. So, there's that! Happy ending, I retired at 56-1/2 regardless.
Great content as usual. One additional thought about inheritances. If you plan to leave something to your kids, or whoever, understand the tax consequences of various accounts, such as an IRA, where taxes will be due from the estate, up until the date it's distributed. As for credit scores, remember rhe new rule. If you have a good credit score, your fees for a mortgage will be higher than with bad credit!
Hopefully someone with an economics education fixes that backwards new system
Yes, The Snowball is an excellent book.
Thanks ❤
CC early on? No way! Plan for the best, prepare for the worst. No one should start life believing debt is good. A solid Fico score is easy to obtain in your early 20s.
We are “spending” our grandkids’ inheritance by funding 529s, providing for the extras ( sports shoes, musical instruments, extra classes), and funding a family vacation twice a year. Memories are everything (and we live across country from each other). Invest in the kid is our motto. We are thinking of funding Roths the first year of work. That happens this year for the oldest grand.
Our children are well launched, with solid careers. They, clearly, understand money. Years of doing budgets and saving for stuff was key to them.
Powerful video with critical ideas on money management in all aspects. Lesson from dad was his way by example. We are blessed by his planning and I hope to do the same for someone else.
I like the idea of the 5% rule (Trust stipulation). That preserves generational wealth. Otherwise, the younger they are, the quicker they will blow it on frivolity.
Great episode!! I did not know about the add your kid to the credit card trick, that is awesome. Many other great tips!
Erin, as usual, you are insightful, practical, and can explain these concepts in a way everyone can understand and appreciate. I saw another video a couple months ago on the sane topic on another channel that basically said us Boomers had all the money tied up and since the economy was in such rough shape and all the Millennials and Gen Xers were struggling we should all just hurry up and die already so the wealth gets passed down. I think your videos should be required viewing for all high school classes!
I support you Erin! Go get it!
Great video, Erin. My parents didn’t teach me about finances, but I learned through the school of hard knocks of experience. I’m trying to teach my boys who will likely each inherit a nice sum in the middle seven figures. I’ve set up 529 plans for the grandkids and a niece and nephew who lost their father. I’ve also set up custodial accounts to help them get started in life (hopefully). We’re investing in dividend growth stocks and are telling the boys to live off the dividends and to teach their kids to do the same. Only time will tell if they listen.
Thanks for another great video, Erin! Our daughters are 22 and 19. As I'm 10 years older than my wife, and her family tends to be long lived, I've no idea if we'll have much left to pass on to our kids. I was very pleased you addressed non-tangibles. I've taught and demonstrated to our girls that getting a job, living within your means, and investing even a small amount every month (compounding and returns: the investors miracle tools) can lead to a very comfortable retirement after 35 or 40 years
If I am lucky, I won't receive any debt when my parents pass. Their poor choices with money were what made me choose to live my life completely differently (starting in my teens).
I feel you on that one, big time.
Love your videos! You might want to check the typo in the title of the video(*wealth*not weath). Keep up the great work!
Fixed! Thank you!!
Absolutely love this!
Leaving $ to my kid’s Retirement I think is better than just leaving it to them!
I so want her to have enough money for Retirement and don’t need her to buy that new car when she is younger!
I would like to leave an inheritance, but I think it’s unlikely that I’ll ever get married, so it’s not crucial. It would just be a cherry on top for my siblings or their kids.
I'm 46, 4 kids. Respectfully, I'd recommend against adding preschoolers as CC riders. Too much risk if a life catastrophe strikes- a 5-15 year old won't know how to navigate the CC stuff. Instead, help them get a $300 limit secured credit card when they're 18. It's low cost or free, and my 18 yr old had a banging credit score by his 19th b-day. His score secured his first apartment later and it didn't cost him any risk or $. Thanks for the vid!
There’s zero risk for the infant added to your credit card…as long as you are financially secure and ALWAYS treat your credit cards like checks (have to be paid off in full).
Yes helping an 18 year old get a low credit limit card to teach proper usage is the next step. You can provide them an amazing score, but should always teach proper usage of credit cards. A high limit doesn’t mean you have that much cash to spend, it simply keeps your utilization low
The concern isn't that the child may abuse the card, the concern is that something will happen to the adult that will derail the financial future of the child. Divorce, death, disease, the development of mental health issues- these things wreck finance's. If your child is tied to your CC and you suffer these things, they'll go down with you. Not a good idea, too much risk.
I really like the idea of passing knowledge and work and saving ethics in addition to or instead of assets. Its the old teach a person to fish versus giving a person a fish comparison.
Great topic Erin, we do plan to leave some or maybe a sizable amount to our kids. We also want to continue to spend vacation money on them as long as they are willing to join us.
Giving some to our favorite charities is also in the plan.
We will be setting up our Donor Advised Fund this year.
5:49 No, that couldn't be the REAL reason 😂
8:25!
Erin!
My Daughter hasn’t had kids yet but! I want to do this!
Wife and I own 4-Rental Houses and I figure I can have Jr. modeling the various bedrooms before they are 1!
Do they have to pay Taxes on this income???
I figure I’ll pay as much as we put into their ROTH!
Kinda crazy if we don’t MAX it out!
Crazy thing is by the time this Compounds over their Life we will look much Richer than we are as the account will be worth Millions by the time they retire!
Oh, I think this topic deserves a show by itself!
Thanks for bringing it up! I’ve been telling the wife about to idea for years now!
Is there any way to put this money in a trust or something to lock it up until they are 60?
Thank You Erin!
I am definitely going to do a full show on it 😊
I wish you would include inflation (at least 2%) when doing compound interest. $10million in 50 years is closer to half that with inflation accounted for. Still epic but much more accurate
I’m 60 and have a sports card collection that I’ve always thought of generation wealth.. or multi generational… i have multiple banks to have a safe deposit box to keep the higher end ones in...
Discover has a pink credit card and my teenage daughter loves it. She is very responsible with the card and checks with me before she uses it.
Hi Erin! Would you know if I could get a 529 for my niece? I do not have children at the moment.
ERIN: Please answer this -- if you pay off your credit card in full monthly, won't the credit card issuer say, Your credit utilization rate is 0%?
All depends on when your card issuer repots to the agency. If you pay off you card on the 15th but they report to the agencies on the eighth, then no hear utilization would not be at 0%
If you want here, utilization to be at 0%, I would pay your card off more frequently than once a month
@@ErinTalksMoney That is what I am doing for the last six months. Using it then paying it off...
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What I'm seeing is a lot of people are trying to spend their kids inheritance before they die. Spending money is ok in moderation. For instance, it's ok to take a luxury vacation but do you need one every month? It's ok to buy a sports car but do you really need 3 to 8?
I'm 51 and my generation has built wealth if they were responsible. I have a friend taking luxury vacations once a month. She is a nurse. She gives her kids and grandkids vacations. Her husband is a travel agent. I know its discounted but the wealth is being spent all on luxury. I have a friend who owns 8 cars/trucks. He works in manufacturing. He helps his son who is a homeowner already. But the money from a few of those cars could be growing. It's easy to build wealth raising one child but now he has 4 grandkids. Leaving them a nice inheritance won't be easy.
When you say some inheritance are over $500k, I thought to myself I could never leave my family that much wealth. Then I remembered I already gave away 2 nice single family homes and passed the $500k mark. If I leave my youngest this one, I'm over $1 million in real estate.
the notion that you have to leave an inheritance is absolutely ridiculous. It's your money. You earned it and you saved it, so spend it.
@@hanwagu9967 But passing down wealth keeps the neck generation from struggling. For instance, they don't have to pay rent while saving a down payment on a house.
I agree people should enjoy life but some people take it too far. I've had a good day purchasing work clothes for my daughter and we got lunch. I enjoy the beach but im creating memories right here in my hometown. My teenager isn't stressed over the cost of clothes and shoes. Etc.
One of her friends mom makes more money than I do but doesn't very little to help her. She is spending most of her money on rent. It's sad because the young girl has great character and a great work ethic. Her mom is just self centered and misguided. It's strange behavior for an RN in labor and delivery. I have a friend who is an RN I'm the same department. They both have similar personalities. They take on men who have little to no income but work their kids like dogs.
In my opinion, it makes me a better financial mutant being able to control my emotions even though I make less at my w2 employment.
First!
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I hate this topic. Love your videos. I grew up so poor that I had to support my parents once I made enough. I hate spoiled entitled overgrown kids buying up homes they don’t deserve with all cash they didn’t earn. Irreversible twisted expectations. It’s the downfall of society - fewer and fewer people making it on their own. Entitlement is the society’s cancer.
Boo Hoo. I hate the ones who cry that they never got a leg up, so they shouldn’t have to associate with those who have. I know people who inherited and people who didn’t. The drive to work and be successful is a totally different inner strength.
My husband started with a duffle bag and ended quite nicely. My kids started in the middle and are working to the top. Being self educated and motivated starts at age one….
If you should ever have a windfall - of being in the right place at the right time- I hope you remember this cry stance.
I also hate the ones who cry that they never got a leg up. But I hate more the ignorance of those who don't know how entitlements skew expectations, work ethic, effort, etc. to the point of truly spoiled rotten apples in the cart of society. It's really sad how some people continue to twist things around totally blind to what's happening in each generation.
I earned and saved my money...the next generation did not. generational wealth is not in my lexicon.
i talk to my son about finances all the time but it's probably in one ear and out the other. i hope not. i was talking to him about the power of compounding and the rule of 72 before 10 y/o. i try to instill in him the idea that stocks indicates ownership in companies rather than something that goes up and down. when we see the BNSF train i say we own a nut and bolt in that train or a plastic cup in a Dairy Queen. Pass a Waste Management landfill on the way to school and say we own a piece of that chain link fence or own some of the packs of snacks we see in grocery. we have a revocable living trust in case my wife and i die that gives him a third @ 25 half the remaining @30 and the rest @35 y/o. i tell him that he may end up with nothing or that he may end up with a lot(with the Montecarlo analysis) but not to count on it and paraphrasing Peter Parker's uncle say "with great wealth(great for us being immigrants and all) comes great responsiblilty". he is earning money the first time this summer and i am having him save 35% and have offered to match whatever earned income he has for the year to open a roth ira( he is 19y/o). he has a UTMA custodial account that i haven't turned over to him yet( Vanguard says can be until he is 21) to get him enthused about investing. opened after his 17th birthday and seeded with $1500 and added the child tax credit money as well as his old christmas and birthday money. unfortunately more than 2 years in VTI he has only appreciated less than $50 on about $4000. i explained to him that once he is done with his college that i could give him 35 K left over from his 529( there will be a lot left) but that i need him to have earned income in order to do that and that it would be most benefical for him that we put it in as early as possible. i am doing roth conversions and touching my roth assets last for the benefical legacy aspects. if we end up with more assets as we grow older, i may look into protecting the assets i accumulated with another kind of trust so as not to be taken away by a future ex wife. i would roll over in my grave if something like that happened.
My two kids are in their mid 20s now. I did a lot of what you say you are doing. I can tell you some of it does stick. Keep on keeping on.
@@mikesurel5040 he ended up earning 2200 or 2400 in 2023 so i funded a roth for him( helped him through the process and put it in vti at end of December but i funded it) and added 5 k to his utma for his 20th birthday. finally, the taxable has $1000 in ltcg so far.
Hi Erin, great video! My parents never talked about their finances, but my mom started a bank account for me with $5 when I was 5 yrs old and my dad got me started in coin collecting, which my collection now is worth about 10 grand. So learning early on about money and different aspects of money has made a huge difference in my life. And being able to give to my church and different charities is very rewarding! Have a blessed weekend! 😊
My parents never talked about money or sex, us kids figured they had neither.