Everyone wants to provide for their family and create generational wealth to give their kids the best chance of success. But if you don’t have a six-figure salary, how can you build a big enough nest egg to give your children a leg up in life?
According to a recent survey, 33% of millionaires never made six figures during any year of their entire career. They attribute their success to working hard and investing diligently, not to making a high income or getting a large inheritance.
So even if you earn an average income, you can still pass money on to your kids. Here are five of the best ways to grow your savings and create generational wealth on any salary.
5 Ways to Create Generational Wealth for Your Family
1. Start College Funds for Your Kids
In America, the average student graduates with over $30,000 in student loan debt. Having to pay off high-interest loans can make it difficult for college grads to save for long-term goals like retirement and create generational wealth. If you can relieve your kids of that burden by paying for their college education, they’ll be much better off financially.
Even on an average income, you can cover the cost of your children’s education by starting their college fund as soon as they’re born. To send a child to a public university, parents only need to invest around $250 per month in a 529 plan for 17 years.
By investing additional funds, you could even pay for your grandchildren’s tuition.
2. Start a Business
The wealthiest person in America, Jeff Bezos, built his fortune by starting a business. Although there’s no guarantee your startup will be as successful as Amazon, launching a business or side hustle is one of the best ways to generate the extra income you need to build your savings and create generational wealth.
If the business takes off, you could even pass it down to your kids after you retire, giving them the chance to have a fulfilling, lucrative career.
If you’re not sure what kind of startup you want to launch, take a look at the industries that are doing well to get profitable ideas. Right now, small businesses that focus on landscaping, online content production, funeral services, wellness, and education are thriving.
3. Invest in the Stock Market
Running a profitable business takes a lot of long hours and hard work. If you’re looking for a more passive way to create generational wealth, you may want to try your hand at investing in the stock market.
On average, the stock market yields a return of 10% annually, so you can grow your money substantially by investing it wisely. Although it’s tempting to try to strike it rich by trading individual stocks, you’ll usually get the best results by purchasing low-fee index and mutual funds. They contain a diverse mix of securities to lower your risk and maximize your returns over time.
4. Invest in Real Estate
Although real estate has lower historical returns than the stock market, investing in rental properties is still a great way to build your wealth.
If you buy a multi-family property and live in one of the units, you may be able to secure a loan with a low-interest rate and down payment. This will allow you to start building equity even if you don’t have enough savings to put a lot of money down.
And if you rent out the other units, your mortgage could even be covered by the money you get from your tenants, which will lower your monthly expenses and enable you to save even more.
You’ll also be able to leave the property to your kids and give them a head start on climbing the property ladder.
5. Educate Your Family About Finances
Leaving millions of dollars to your children is pointless if they don’t know how to manage it. You’ve probably learned dozens of invaluable personal finance lessons along the way, so make sure to pass them on to your kids starting from a young age.
Teach them how to be responsible with money and take calculated risks like investing in real estate to continue to grow the nest egg you’ve built for them.
Even if you don’t earn millions, you can still create generational wealth using these strategies and build a lasting financial legacy for your family.