It’s every parent’s dream to give their child a life better than the one they had. Whether it is schooling, extracurricular involvement or setting them up with an ironclad financial blanket that can afford the child the opportunities his/her parents could only dream of as a child.
But how can you truly weave that financial blanket that will set your child up for life? Don’t worry, we’ve got you.
In observance of Financial Literacy month, we sat down with Shamar Clarke, an accomplished Financial Advisor at Sagicor Life Jamaica – a leading financial conglomerate in the Caribbean region – to discuss some strategies that can help you to create wealth and weave that financial blanket for your family’s next generation.
What is generational wealth?
Generational wealth is any kind of asset that families pass down to their children or grandchildren (generation). This can be in the form of cash, investment funds, stocks and bonds, properties and even companies.
To the lay Jamaican person, this concept is simply, the “dead lef” – whatever asset is left for a relative/friend to reap the benefits after the initial seed was planted eons ago.
How can parents create generational wealth
Before you even start making moves to create wealth, you must define wealth for yourself and be clear in outlining what it is you want to achieve.Shamar Clarke
Simply put, what is wealth for you? Is it that you want to be able to retire earlier at 40 or 45; Is that you want to have businesses; Is it that you want to travel the world; is that you want to have a substantial amount of income coming in from additional sources?
This will help you along your journey in setting plans to work towards accomplishing the goal.
Here are his tips for parents looking to create generational wealth:
- Learn how to manage your cash flow and budget out your money.
Understand exactly what comes in and what goes out. Every single dollar that you’re earning should have a job; it should know exactly what it is supposed to be doing, rather than just coming in and jumping out the window.
- Pay yourself first
It means now that once your income comes in, you first set aside some money that you are going to be keeping to create the wealth that you want. So if you’re earning $200,000 per month, you may be able to put aside $50,000 per month and that money should go towards investments (and other wealth creation assets).
- Start investing early and be consistent
Especially when you’re just starting out, you can invest in unit trusts, mutual funds and you can invest in stocks. You don’t need to have a huge amount of cash to get started. These products will help you create wealth.
Real estate will come a little later, wherein you can invest in real estate through real estate funds or you can come together with friends to buy a property.
- Learn to manage credit cards
The first step to properly managing your credit card is understanding the difference between the statement date and due date. Understanding that relationship can save your credit a lot.
- Getting proper life insurance
This life insurance policy is going to be able to protect the wealth for your family and loved ones. It can also help you to get the property that you are going to be purchasing as a means of investing or just for your holdings or your personal abode.
- BONUS TIP: Get a financial advisor
Your financial advisor can be someone that you choose based on their reputation in the field. Get somebody that you are willing to listen to, somebody that is reputable and somebody who can guide you in achieving the goals you want.
Though wealth creation may sound like a lot, these steps outlined have shown you can start small, be consistent and you would be amazed at just how much wealth you are able to accumulate and just how secure a future you can develop for your minis.
The best time to start is now. Let’s create those habits that will give your child the life you never had.