What is a First Generation Wealth Builder? What is a Second Generation Wealth Builder?
***Originally published 2019–2022 on firstladiesofpovertyfoundation.org
Written by: Shatoyia Jones, Director of Operations, Founder / CEO, wealth education consultant, poverty & racial equity specialist at First Ladies of Poverty Foundation
If you have been following the growth and evolution journey of First Ladies of Poverty Foundation over the years, you may have noticed that we used the terms first generation wealth builder and second generation wealth builder often when discussing our community or target audience we serve regarding our educational programming, products and services.
Let’s put a solid definition to what we mean when we say we serve first generation wealth builders. What is a first generation wealth builder? What is a second generation wealth builder? And what are the defining differences between a first generation wealth builder and second generation wealth builder?
Similar to the concept of a first generation college student, a student whose parent(s) did not complete a 4-year college or university degree or whose parents have some college experience but did not earn a degree from a 4-year college or university, [Source] a first generation wealth builder is an individual who has decided to build generational wealth and does not come from a family whose tradition and foundation is based in building generational wealth. Often, their parents and other immediate and extended family members have not built generational wealth for themselves or their families and also do not come from a tradition and foundation based in building generational wealth, though this is not always the case.
Defining 2 Decades of Impact & Service
As Director of Operations, Wealth Education Consultant, Poverty and Racial Equity Specialist and Founder/CEO of the first generation wealth builders community at First Ladies of Poverty Foundation with an almost 2 decade combined personal and professional track record in education, leadership / management, social impact, entrepreneurship based in poverty reduction and opportunity access, I have created the following definitions to describe the circumstances of the communities we aim to serve with our programming: first and second generation wealth builders.
First Generation Wealth Builder (FGWBs)
First generation wealth builders (FGWBs) and second generation wealth builders (SGWBs) are terms that have used since 2012 to describe individuals in two different circumstances of building wealth.
First generation wealth builders are individuals who have no financial inheritance, no inherited assets and are the first in their family to start and continue the process to building generational wealth in their families. A first generation wealth builders are usually building from ground zero: zero inheritance in financial assets, a portfolio of liabilities and a $0 or negative net worth. [Source]
Second Generation Wealth Builder (SGWBs)
A second generation wealth builder, typically is an individual who is one of the few in their family to think about and/or continue the process of building generational wealth. Second generation wealth builders (SGWBs) usually have some financial inheritance or some type of inherited assets but don’t know how to manage, sustain or grow their inheritance and are looking to learn how to do so.
However, unlike a first generation wealth builder, a second generation wealth builder does not start at ground zero; second generation wealth builders typically start with some inheritance in financial assets, maybe a portfolio of assets and liabilities and a positive net worth, which can start at $50K-$100K or even more. [Source]
Nuances
First generation wealth builders generally are living a paycheck to paycheck lifestyle and/or have no passive income streams. Second generation wealth builders can be living paycheck to paycheck or have a cushion, but typically do not know how to maintain, invest and grow the wealth and assets inherited.
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***Originally published 2019–2022 on firstladiesofpovertyfoundation.org
