We’ve got 3 wealth building tips for long-term family finances
Building wealth for your family is not a short-term plan. Your career and investment decisions can steadily amass wealth in the form of home equity, appreciating assets, stocks, bonds, retirement plans, and more. In the end, your goal may even be to create generational wealth, passing the benefits of today’s smart decisions forward to enrich the lives of your descendants for years to come.
As you get started, it’s important to take a long view of your financial situation. Every little bit counts, given enough time. Here are our # wealth-building tips to kick-start your family’s future financial success.
1. Consider investing 15 to 20% of your annual income
If you’ve never taken a keen interest in investing before, you’re not alone — over half of Americans own financial assets, but the majority are in employer-sponsored 401(k) plans. These (and traditional or Roth IRAs) are a great place to start, but they’re just the beginning. Many financial professionals recommend investing in the range of 15-20% of your income in retirement accounts and a broader investment portfolio.
It’s often wise to max out any employer match contributions and tax-advantaged IRA options first, then look to other personal investing options. IRAs max out at $6,000 per year as of 2022, with catch-up contributions for individuals older than 50 capping at $7,000 per year.
2. Create passive income streams
Passive income is essentially any money you continue to make from something you only did once. Interest and dividends from high-yield savings accounts or valuable stocks are one example, but these have less power in the earlier stages of wealth building, when your traditional income (from working) will be much larger.
However, there are other options for passive income as well. Rental properties are a popular topic in wealth building advice, as an asset that makes money more or less by existing on a month-to-month basis. Real estate purchases not only create cash flow over time in the form of rentals, but also increase in value over time, making them a reliable path towards long-term wealth. Other examples include book royalties, peer-to-peer lending, or online applications or tools that others can pay to use.
3. Invest in yourself through financial education
A strong basis in financial literacy can help you stay on track throughout each stage of your financial life. Take the steps to acquire the education you need to succeed with your financial goals. Learn how to manage your wealth, master the craft of investing, and make arrangements that will ensure your family’s financial future is secure. And never stop learning.
It’s easy to get started, too. Take a comprehensive wealth building course with the Financial Educators Network and get the foundation in place in two in-person or virtual course sessions catered specifically to the needs of families who aim to amass sustainable personal wealth. Explore your course options today and register to attend a local course with wealth building tips from a licensed financial professional.