Generational wealth protects families while creating more opportunities for learning and growth. Wealth-building for women is especially crucial because financial security brings confidence. Use these tips to establish wealth for multiple generations to use.
Generational wealth building is essential for women. Relying on others for support and protection can be frightening, and it offers no genuine security. However, becoming financially stable as a woman can be tricky. It also brings countless benefits that are worth the effort.
Amassing a fortune that you can share with loved ones helps boost confidence and provides opportunities. Unfortunately, getting to the point where you no longer worry about money is challenging. Today’s rapidly evolving economy doesn’t make it any easier. However, neither do the social inequities that still exist in our culture.
Wealth generation requires several steps, and some can seem much steeper for women. Various gender-related obstacles can narrow the path to financial success. How can a woman build generational wealth under such dire circumstances? Here is what you need to know.
Table of Contents
Why Women Struggle to Build Generational Wealth
5 Obstacles That Can Hinder Wealth Building for Anyone
#1. Lack of Education and Training
#3. Empty Investment Portfolios
10 Ways to Build Generational Wealth as a Woman
TIP #1: Save a Portion of Your Income
TIP #2: Establish a Roth Retirement Plan
TIP #4: Hire a Financial Advisor
TIP #5: Build an Emergency Fund
TIP #6: Invest in Antiques and Collectibles
TIP #7: Teach Your Children About Wealth Management
TIP #9: Use Insurance to Your Advantage
TIP #10: Think Beyond the Present
What Is Generational Wealth?
Understanding the generational wealth concept is critical. It includes more than having extra money in the bank. Investors and financial advisors define this type of abundance as a particular economic state. Established assets and mitigated liabilities often indicate it.
Individuals and families with financial security typically enjoy more opportunities in life. For example, they can afford better education, pay for traveling abroad, and eat healthier foods. They’re also privy to enhanced medical care, making their average lifespans longer than those in poverty.
This form of wealth can come in all shapes, sizes, and currencies. Some families own stocks, bonds, or real estate. Other tribes build generational wealth with cash, companies, and investing. Anything that provides a benefit or an asset for children or grandchildren is legitimate.
A portfolio that transcends generations requires wisdom and financial literacy. Some people might also need help from an investment advisor. Meanwhile, the typical motivators for building wealth include:
- Paying for college tuition
- Home improvements
- Land development
- Retirement padding
- Maintaining a business
- Traveling abroad
- Erasing debts
- Purchasing assets
Generational wealth offers increased social mobility. It encourages more risk-taking and inspires innovation. Therefore, special knowledge is also a treasure. Both men and women are capable of building a fortune for their families despite misleading cultural expectations.
Why Women Struggle to Build Generational Wealth
Even savvy modern women must fight to become financially secure. Regardless of their profession or level of education, many females feel stuck in their current economic situations. Building generational wealth under those conditions is not for the faint of heart. However, years of committed fiscal responsibility still might not be enough.
Financial literacy could be partially to blame. Traditionally, men were the primary breadwinners in Western households. Gender norms continually evolve, yet women are still the underdogs in business and beyond. Thus, closing the wealth gap is critical to helping women establish economic affluence.
Women also face the following challenges when trying to build their bank accounts for the future:
#1. Wage Disparities
According to DEI experts and economists, women earn about 82 cents for every dollar earned by a man in the same position. As a rampant form of discrimination, even hardworking women can’t catch a break without being diligent and creative.
#2. Employment Segregation
Particular industries scoff at the idea of hiring female employees. They can therefore offer fewer incentives to work long-term. As a result, women-owned businesses are finally increasing in number. Collectively, they earn over $1.8 trillion per year.
#3. Caregiver Burdens
Women, especially mothers, are the backbones of a household. Their duties are neverending, often interfering with their professional goals. Saving money and learning to invest can be extra challenging for busy caregivers. Much of their cash goes to family obligations first.
#4. Financial Illiteracy
Financial tips for women are everywhere. However, the techniques won’t make sense without fundamental literacy. Modern education systems seldom teach money management skills. Stock markets, cryptocurrency, and consumer credit seem foreign to many people.
#5. Systematic Barriers
U.S. tax code can place unfair restrictions and impose burdens on low-income women and people of color. Many American citizens must navigate around unequally offered savings and investment incentives. Some can also get stuck in a cycle of debt that limits generational wealth building.
Women can become the financial masters of their families despite the gender pay gap, discrimination, and lifestyle challenges. Seek help from an advisor for more customized information.
5 Obstacles That Can Hinder Wealth Building for Anyone
Women might encounter more challenges on the road to financial freedom. Their male counterparts could build generational wealth faster and more efficiently because of specific barriers. However, some obstacles come for us all. These five hurdles can hinder anyone’s efforts to build wealth for future generations.
#1. Lack of Education and Training
Earning money requires knowledge and ability. However, some people struggle to establish a fortune because they’re uneducated or untrained. Wealth building also begs for continued learning as economies shift and social expectations change.
#2. Financial Illiteracy
Understanding the stock market, cryptocurrency, and investing is crucial. All three concepts play a significant role in wealth building and prolonged prosperity. Unfortunately, a lack of experience in these three areas can lead to lifelong economic struggles.
#3. Empty Investment Portfolios
Creating a lucrative portfolio is virtually impossible without financial literacy. You also need money to spend on investments and assets. Meanwhile, underperforming portfolios underpin a cycle of poverty that can reduce wealth and prevent fortunes from reaching maturity.
#4. Poor Budgeting Skills
Finances can get out of control without a detailed budget in place. You can’t track spending, you never know what’s due, and you could miss meaningful opportunities. While wealth building is not contingent on perfection, due diligence is always required.
#5.Overspending Habits
Spending too much is easy. We all do it occasionally. However, making a habit of overspending can have long-lasting consequences. Define a goal and reach it, then lose all your hard work because of poor money management skills.
Gather and maintain funds for your best life by gaining the knowledge and experience needed. Build your investment portfolio with liquid and non-liquid assets. Then create a budget to track your finances and prevent overspending. You can funnel that cash into something more substantial, like stocks, bonds, or otherwise.
DID YOU KNOW: Making more money doesn’t necessarily make you more financially secure. Some millionaires still struggle to pay the bills.
10 Ways to Build Generational Wealth as a Woman
Learn ways to develop financial security and pass the benefits to your posterity. Women might have fewer opportunities on average, but economic freedom can still be theirs. It begins with increasing financial literacy, and it ends when you say stop. The only cap on what’s possible is the one you put there.
Embrace the challenges, understanding that you can’t solve the world’s problems overnight. You also can’t wait for perfection before you begin building generational wealth. The future is now, and tomorrow will be here before you know it. Use these ten tips to prepare:
TIP #1: Save a Portion of Your Income
Put back at least 10% of your income for financial planning. You can divvy out cash based on payment frequency or set aside a lump sum once a year. However, always stick your money in a tax-adjusted retirement account (i.e., 401K) to make the most of every dollar.
HACK: If possible, raise your contribution by about 1% every 2-3 years.
TIP #2: Establish a Roth Retirement Plan
Roth retirement plans are liquid asset accounts that can help in times of need. They’re also essential for young women and entrepreneurs. Most Roth IRAs offer convenient tax deductions for contributions to the plan. Thus, you don’t have to pay extra taxes when you withdraw money for specific goals.
HACK: Avoid penalties by ensuring all deposits and withdrawals meet IRS regulations.
TIP #3: Start a Side Hustle
Side gigs can become a terrific source of residual income. You can turn talents into profits and still have time for your regular job. Side hustles also provide extra money for savings, retirement accounts, and purchasing assets. Then, develop it into a full-time business if you can find the time.
HACK: Put your side gig cash into a high-yield savings account for maximum impact.
TIP #4: Hire a Financial Advisor
Financial advisors help you determine the best money management habits for your goals. They can customize services to build generational wealth through intelligent investment strategies. Their services often include personal or business accounting, tax preparation, and private investing.
HACK: Create a financial strategy based on your tolerance for risk and loss.
TIP #5: Build an Emergency Fund
Establishing savings helps you pay for unnecessary luxuries. However, an emergency fund stops you from going bankrupt every time something unpredictable happens. Set up direct deposit into a separate account for unexpected expenses. Then don’t touch it unless you have to.
HACK: Use the 50/30/20 rule to manage your finances for a stable future.
TIP #6: Invest in Antiques and Collectibles
Spend your money on things that will increase in value. Items such as antiques, collectibles, memorabilia, and souvenirs can sell for fortunes in some markets. Buying cars, clothes, and expensive jewelry is not the answer. Usually, those assets depreciate over time.
HACK: Visit nearby thrift stores and buy valuable assets secondhand to save money.
TIP #7: Teach Your Children About Wealth Management
Build generational wealth for your family, then show them how to keep it. You could also teach loved ones to increase the family fortune or contribute in personalized ways. Demonstrate the power of fiscal diligence and give them opportunities to learn through experience.
HACK: Make your qualified children authorized users on your credit card to establish a credit history.
TIP #8: Eliminate Your Debts
Credit cards and loans are sometimes essential to generational wealth building. However, you should never let your debts overwhelm you. Keep your debt-to-income ratio below 30% or pay off obligations in full. You’ll boost your credit score and enjoy lower financing rates from lenders.
HACK: Pay more than the minimum balance to eliminate debts quickly.
TIP #9: Use Insurance to Your Advantage
Some insurance policies let you borrow against your account. Whole life contracts are an excellent example. You can also use insurance to protect assets or pay for damages and repairs. Open policies that cover the fruits of your labor to prevent unnecessary spending.
HACK: Compare several insurance policies, then bundle services to save money.
TIP #10: Think Beyond the Present
Current economic conditions and financial policies could change at any time. Meanwhile, generational wealth-building means maintaining security for future posterity. Imagine your investment portfolio matured, then consider what’s missing. Ask a financial advisor to help you diversify.
HACK: Use robo-advisors or other automated financial services to simplify investing.
Diversity, equity, and inclusion (DEI) is only starting to find a home in modern society. Women must continually push for equality while improving their financial literacy. However, building generational wealth is empowering, uplifting families for years to come.
Conclusion
Generational wealth is the kind that doesn’t disappear after grandma dies. It stays in the family for loved ones to use for survival, creativity, or innovation. Money is not the root of all evil, but poverty is the mother of disadvantage. As a capable woman, you can build a fortune and share it with the people you love the most.
Remember, making lots of money isn’t the only thing that matters. High-paying jobs and lucrative side gigs help, but they won’t secure your assets. Generational wealth and its benefits could elude your bloodline without wise financial planning.
About The Author
Sibongile Ngako believes that multifaceted women can accomplish tremendous things with compassionate support. As the VP of Consumer Compliance and Head of Global Compliance at Affirm, Inc., she leverages her expertise and authenticity to empower women in all aspects of life. Sibongile focuses on promoting inclusivity in the workplace as an ally and advocate of female perspectives. Her dedication to professional equity earned her the GRCB Spectrum Award in 2017.
Harvard-educated and family-oriented, Sibongile maintains a grounded and balanced approach to social justice reform. Her team strives to make a positive impression despite popular opinion. Her motto: “If you focus on making a meaningful impact, your reputation will follow.” Ngako fortifies her zeal for women’s empowerment through mentorship and company-sponsored URG and DEI programs.
