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What is Generational Wealth?

Generational wealth pertains to assets passed by one generation of a family member to another. Assets can include stocks, bonds, and other investments such as real estate and family businesses.

Other terms for generational wealth include family wealth, legacy wealth, multigenerational wealth, and intergenerational wealth. Many people may associate generational wealth with financial wealth such as cash, bonds, real estate, and family businesses. However, generational wealth can include valuable possessions, heirlooms, educational legacy, traditions, and connections.

Generational wealth transfers after death by passing it down in the form of an inheritance. A generation does not always have to die off in order to enrich its heirs. Families can transfer much of their wealth in other ways such as gifts, educational expenses, and medical expenses.

For instance, your grandparent died. The Last Will and Testament specifies that the S$2 million fortune be divided evenly to five grandchildren. The funds and assets passed to these grandchildren would then be considered generational wealth.

BUILDING GENERATIONAL WEALTH

Creating generational wealth to hand down to future generations starts with establishing a solid financial footing. You can build your generational wealth by investing. Buying stocks, bonds, and other investments can help your money grow through the power of compound interest.

Image Credits: pixabay.com

Moreover, you must have an emergency fund that will prepare you for short-term goals such as down payments on a home. Eliminating high-interest debt such as credit cards can be a helpful strategy to build your savings too. Lastly, opening lucrative family business can provide opportunities for you to create a financially successful life. Pass these down to the future generation!

“When money realizes that it is in good hands, it wants to stay and multiply in those hands.”
― Idowu Koyenikan, Wealth for All: Living a Life of Success at the Edge of Your Ability

Sources: 1 & 2

5 Surefire Ways To Boost Your Net Worth

With the wealth you possess right now, do you barely get by or do you live lavishly?

Realize your financial situation by actually calculating your net worth. It is pretty straightforward! Simply add up the value of your assets and deduct the value of your liabilities.

Assets include savings, investments, CPF balances, insurance, properties, cars, or anything you own with monetary value. While liabilities include loans, mortgages, credit card debt, or all the money you still owe.

To save you time and effort, here is a tool to help you calculate and benchmark your personal net worth: salary.sg/2007/calculate-net-worth-and-benchmark-it. Remember to measure your net worth every six months to a year as recommended by financial experts. Doing too often may lead to unnecessary stress and panic.

Interestingly, one might end up with a negative net worth due to taking on a number of loans and poor money management skills. Do not let this happen to you!

Consider these 5 Surefire Ways To Boost Your Net Worth:

1. BE A DEBT NINJA

Slice debts out of your life as soon as possible. You probably heard this tip before. But, it goes without saying that aiming to clear off the high-interest debts (e.g., outstanding credit card balance) will help you pay lower interests in the long run.

Minimize the negative effects of debt while increasing your wealth by taking part in the debt diet, as popularized by Oprah Winfrey.

2. SPEND LESS

Nobody, including me, likes to hear that they are spending too much. I know how delicious a cup of Starbucks caramel frappuccino is or how satisfying it is to get the latest IPhone but these things will catch up on your wallet. The small and big expenses can add up as fast as Kopitiam queues lengthen during lunch time.

This is why you must take down your expenses everyday for at least a week and realize your spending habits. By knowing so, eliminate or reduce the areas which are unnecessary. This act of cutting expenses can have a substantial impact to your net worth!

3. INVEST MORE

It only makes sense that making your money work for you can improve your wealth. If you have spare cash lying around your savings account (experiencing small interest growth), consider investing in index funds, unit trusts, bonds, or RIETs (Real Estate Investment Trust).

*Friendly Reminder: If you do not have enough knowledge or did not consult a financial adviser, please refrain from committing to any type of investment first.

4. GET A RAISE

Another way to increase your wealth is by increasing your income. If you have been in the organization for a period of time and feel that you had done some good, there is no harm in asking for a reasonable pay raise.

Do not open a discussion with your boss unless you are fully prepared. Consider these six things to help you prepare.

5. SEEK PROFESSIONAL HELP

One of the most underrated and overlooked step to growing one’s net worth is seeking professional help. Many people are ashamed of their current financial state and get sucked in their negative tracks. Fear not my friend as experienced professionals are able to guide you in budgeting and planning as well as provide you with the latest information on how to grow your assets.

Image Credits: pixabay.com (License: CC0 Public Domain)

There may be no secret formula to permanently increasing your wealth but every time you decrease your debt and boost your assets, your net worth certainly spikes up!

Sources: 1, 2, & 3

Should You Say, “Yes” To A Prenuptial Agreement?

BACKGROUND

In Singapore, more and more couples are interested to enquire about what Prenuptial Agreement entails.

Prenuptial Agreement (Prenup) is a contract between a couple that is about to get married. It is used to set the terms of assets, the control over properties acquired before marriage, the potential wealth division if the relationship later ends, and more. Sounds like a major romance buzzkill, doesn’t it?

Despite its reputation, prenups include significant benefits namely:

a. Protection from one’s debts incurred by the other party,

b. Offer supplementary certainty in financial arrangements, and

c. Protection of family inheritance or businesses in an event of divorce.

IMPORTANT CONSIDERATIONS

Before you sign a prenup, you must consider these 3 things:

1. IT MAY BE DIFFICULT TO DISCUSS

Even if we live in the most expensive city in the world where finances shall be carefully planned, do not assume that your future spouse is comfortable with pushing through a prenup. A prenup may suggest lack of trust in one party as you are planning for unforeseen divorce. Aside from this, talking about monetary and property division can make the marriage sound more like a business matter. Truly, this is a sensitive subject matter that should be handled with care, love, and honesty.

2. IT MAY NOT BE APPLICABLE FOR YOU

Just because your favorite celebrity did it does not mean that you should too! Prenup is not a necessity for everyone. But, I cannot deny that a prenup is especially helpful for couples that either earns about S$20,000 a month or already have children from previous marriages. Couples with previous marriages need to ensure that their children are protected and supported no matter what.

3. PRENUPS ARE IDEALLY BASED ON FAIRNESS

The idea of this written agreement is to highlight fairness and full disclosure of the couple’s assets. Terms have to be fair and reasonable to ensure that there will be no bias (e.g., elitism) and no coercion (e.g., use of threats).

Image Credits: Bambi Corro III via Flickr

Sources: 1 & 2

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