14 Lessons on building Generational Wealth for Millennials

This week is Talk Money Week which is an annual celebration of the work thousands of organisations are doing to improve money management across the UK. I thought I would do my bit by writing about building generational wealth.

Generational wealth is quite a hot topic at the moment. Everyone seems to be talking, rapping or singing about it.

It is quite shocking to read that on average ‘rich’ families tend to not be able to sustain their level of wealth beyond two generations.

On average ‘rich’ families tend to not be able to sustain their level of wealth beyond two generations — Photo by Matt Lamers on Unsplash

Let’s start with the definition:

‘Generational wealth is wealth that is passed down from one generation to another. This is through the accumulation of assets for the future to provide financial security.’

To frame the discussion about building wealth, I have used the album ‘Everything is Love’ by The Carters. Although the album is the third in their series about Jay-Z’s infidelity and their marital woes, The Carters do reveal lots of advice about building wealth. And as the billion-dollar couple they are we can learn a lot from them.

The Carters

According to a report released by the Intergenerational Commission, earlier this year, generation-on-generation progress across both incomes and homeownership rates are falling in the UK. Meaning that millennials are only marginally better off than the generation before them.

So given much higher living standards and increased property prices, how can we as millennials start to think about building generational wealth now? In this post, I use the lyrics from the album on ‘Everything is Love’ to provide some guidance!


1. You must diversify your income

Stack my money fast and go

Fast like a Lambo

Here Beyoncé refers to acquiring money as fast as a Lamborghini, the luxury Italian sports car. I think at one level this implies acquiring money quickly but the ‘and go’ implies to not stay around for too long in one area. According to Forbes, Beyoncé’s Net Worth in 2018 is $355 Million! And she makes money from a variety of sources including Music Streaming and Album Sales, Clothing (her line Ivy Park), Endorsements, Real Estate and the occasional film.

Generational Wealth lesson: How can you diversify your income? Do you have untapped talent that you could be monetising?

2. You must work hard

We livin’ lavish, lavish

I get expensive fabrics

I got expensive habits

At first impression Beyoncé appears to be gloating about her luxurious lifestyle, but I think there is more to it than that. These lyrics are a good reminder to stick to what you can afford, i.e. spend within your means. If you too like Beyonce want to have expensive fabrics and habits, save and work hard to be able to afford them.

Generational wealth lesson: what are your financial habits like? Are you buying things when you can afford them? Do you have an emergency fund — i.e. at least 3 months’ of your salary saved away but easy to reach if required?

3. You must think ahead

I said no to the Super Bowl: you need me, I don’t need you

This line refers to how Jay- Z declined the opportunity to perform at the NFL Superbowl performance out of respect for Colin Kaepernick an American footballer who refuses to stand during the US national anthem to highlight the oppression of Black people in America.

I think the lessons we can learn here is that in business or work, not every opportunity has your name on it. It might seem like a big opportunity that everyone would normally say yes to, but if it doesn’t feel right according to your gut instinct, it is best to say NO.

Generational Wealth lesson: are there opportunities you have been put forward for that you should probably say no to? Building generational wealth is also about understanding the potential impact on your personal brand which is something we should all consider.

4. You must be strategic

Got that dinero on my mind

Beyoncé sings about having money on her mind. This a great reminder that building generational wealth requires strategic decisions and will not happen just because you have money. Remember there is a difference between being rich and being wealthy. Being rich is a stagnant state that implies at this present moment you have money, whereas wealthy people know how to make money or better yet, make their money work for them as Robert Kiyosaki talks about in Rich Dad, Poor Dad.

Generational Wealth lesson: Do you have money on your mind? How good is your financial literacy? If you have spent the time to educate yourself about the basics? Is it time to take the next step and invest in a financial advisor? Finally, consider those around you. Can you have conversations about money with your close colleagues, friends or family? Find a group that works for you and discuss personal finance regularly.

5. You must own stuff

You not a boss, you got a boss

Here Jay-Z brags about being his own boss. As an employee you are accountable to your boss. One lesson we can learn from this is to think about ownership.

Generational Wealth lesson: In the uncertain climate we live in where household businesses are going bust and shutting down, it may be best to own something of your own. Can you start something that you will own yourself and be able to pass down to future generations? Food for thought!

6. You must look beyond cash

Hundred million crib, three million watch, all facts

The Carters have a lot of money and last year they purchased their fourth property an $88 million compound in Bel-Air, Los Angeles. The album also references many luxurious watch brands (Patek Phillipe, Richard Mille etc.) and it is clear Jay-Z is definitely a collector. This is a perfect example of one of the most important lessons about generational wealth. It is not just about cash! Purchasing luxury items or property is a great way to pass on generational wealth.

Generational Wealth lesson: how can you get started on the property ladder or investing in luxury items? Can you start putting money away with friends or family that you trust? Are you keeping your eyes peeled for good opportunities — e.g. brands that are in high demand or properties in up and coming areas? Acquiring assets is smart!

7. You must start now

My great-great-grandchildren already rich

That’s a lot of brown children on your Forbes list

Generational wealth is about passing on wealth to your kids but it is also about keeping the legacy alive. Beyoncé boasts here that she will be able to keep her wealth in her family for 5 generations to come. How can you start sowing seeds for your future generations?

Generational Wealth lesson: If you have kids, put money aside and invest in their future perhaps through a Junior ISA or trust fund. If not, it is never too early to start. Start a separate savings account to tap into when it becomes a priority.

8. You must be a risk-taker

I have no fear of anything, do everything well

One secret to building generational wealth is taking risks. Calculated risks. This is what I believe we can learn from Jay-Z here. You will never know completely about any market so there will always be some element of risk. The sooner you can get comfortable with taking calculated risks in life, the better. I wrote about this in a previous post here.

Generational Wealth lesson: What financial fears are stopping you from thinking about personal finance or generational wealth? As Blue their daughter says ‘never seen a ceiling in my whole life’. What would you do if you weren’t afraid?

9. You must know your worth

It’s just life, I’m just nice, tonight I might, raise my price

Part of building wealth is understanding your value. Sometimes price signifies luxury or premium. How are you pricing your products or yourself (if you do public speaking or other service activities)? The worst thing to try and undercut by is price and then still kid yourself that you can offer the same level of service. Instead position yourself as premium and if you are offering something unique or valuable you will still find a market for it.

Generational Wealth lesson: Don’t undersell yourself or your products. Simple.

10. You must be optimistic

Blessings on blessings, et cetera

Feeling like the best year ever

The lesson here is about optimism, which is such an underrated trait. The most successful people are always optimistic about the future and the part they can play in it. Think Bill Gates, Elon Musk, Warren Buffett, Oprah etc.

Generational Wealth lesson: Don’t let the news fool you. Despite everything not so great happening at the moment we are living at a time where many of us (in the West) haven’t experienced deadly diseases and wars. Start by being more optimistic about the world around you and you will be surprised how many ideas you start to have and opportunities you start to see.

11. You must not do it alone

My friends, real friends, better than your friends

….

No foes, real friends, we ain’t even got to pretend

The Carters devote a whole song to the importance of friendship, a key lesson on building generational wealth. Loyal friends who you can confide in and trust are vital when building your wealth. Two or more brains are definitely better than one.

Generational Wealth lesson: Later Beyoncé mentions ‘I don’t make no moves, yeah, without tellin’ my crew’. Do you have friends you can confide in and problem solve with about your latest ventures? Start by utilising all the knowledge and expertise you have in your circle. I have written a bit more about friendships in a previous post here.

12. You must be LOUD about what you do!

No need to ask, you heard about us

Already know you know about us

People need to know about you. Stop working solidly and quietly, hoping one day someone will notice all the work you are putting in. Get your name out there.

Generational Wealth lesson: Get your name out there using social media effectively. For instance LinkedIn updates or creating your own blog or personal website. This is a great way for you to get leads and very soon opportunities will start to come your way.

13. You must financially support others just starting out

I made my own waves so now they’re anti-Tidal

Tidal is the artist-owned subscription-based music streaming service that Jay-Z created. Here he complains about people being anti-Tidal, hinting at the slow uptake for the service. I think the lessons here are twofold, firstly that ventures take time to be profitable or successful. Secondly, it is a great reminder for us to support the ventures of those around us.

Generational Wealth lesson: How can you support projects and ventures around you that are just starting out? The early bird gets the worm! Sharing posts on social media is great but supporting them financially is even better for them and hopefully you in the long term. Jay-Z is launching a Venture capital fund called Marcy Venture Partners so will be interesting to see what he supports and invests in.

14. You must accumulate wisely

I give my daughter my custom dresses, she gon’ be litty

Vintage pieces by the time she hit the city

Another reminder about other things we can invest in to pass down. Beyoncé here refers to giving her daughter custom dressed and vintage pieces?

Generational Wealth lesson: Do you have any vintage pieces you could pass on to your children? Maybe it is time to declutter and review what you have hidden away or start purchasing more intentionally?

Hopefully now you agree that building generational wealth as a millennial is achievable! It is about having the right mind set as shared with us by the power couple Beyoncé and Jay-Z. Despite tough upbringings and early stardom, they have managed to create a lot of wealth for themselves and their future generations too.

The good thing about the digital age is that making money in the developed world, has never been easier. So shoot your shot!

Finally, it is good to remember that money is not the be all and end all. It is all about balance and making conscious financial decisions that work for you. Building generational wealth is by no means instantaneous and requires discipline, learning and patience.

Remember:

1. You must diversify your income
2. You must work hard
3. You must think ahead
4. You must be strategic
5. You must own stuff
6. You must look beyond cash
7. You must start now
8. You must be a risk-taker
9. You must know your worth
10. You must be optimistic
11. You must not do it alone
12. You must be LOUD about what you do!
13. You must financially support others just starting out
14. You must accumulate wisely

Resources:

· Affordable Property investing: PlotPeer and BrickLane

· Personal Finance Basics: Makers Money Sallie Krawcheck

· Books: The 100 year life , Principles

· Documentary: Generation Wealth by Lauren Greenfield