Building Wealth Column May - June
Hilton, Rockefeller, Ford, Vanderbilt, and Gates. These folks are so rich that when someone is born into their families they become automatic millionaires! From the time they come out of their mother’s womb and the doctor slaps their behind, they are millionaires!
Rich folks aren’t the only ones creating generational wealth; middle-class folks like the Jones’, Davis’ and Gordon’s leave thousands of dollars to their children and grandchildren everyday and so can you!
What’s that? You mean no one in your family has ever ‘gone to be with the Lord’ and left you a big fat inheritance? Well, let’s just face some hard facts here. Maybe it’s because the majority of African Americans would rather drive a Mercedes than leave a mint. Or it could be that we just need to plan better. We both know people who live high on the hog and when they die, the family is left scrounging for money to bury them in a good suit. But it doesn’t have to be that way and if we lived by God’s principles, it wouldn’t be. Yet, for some reason, most of ‘them’ folks have found a way to live well and leave well, while we’re still focused on living in the moment.
Pick up a copy of Thomas Shapiro’s insightful and poignant book,
The Hidden Cost of Being African-American: How Wealth Perpetuates Inequality and you’ll discover that nearly 1 in 4 white families received an inheritance averaging $144,652 after the death of a parent. On the flip side, only about 1 in 20 African-American families inherited an average of $41,985 from a deceased parent.
Let me break that down for you. For every 100 white families, 25 of them will receive an inheritance large enough to buy a luxury car, pay off credit cards, go on a week’s vacation to the French Riviera, buy a new wardrobe, pay for four years of college, and still have plenty left to save. Yet, for every 100 black families, only five will receive an inheritance, and that money won’t be able to buy a third of what white folks can buy. After we purchase a new car (which a lot of us do with inheritance money) there won’t be enough left to pay college tuition, afford an elaborate vacation, a wardrobe or to significantly save and invest. This disparity of wealth has generational implications; and it ain’t good for black folks.
If you are Black, I’ve got a great suggestion. You can ‘pay it forward’, even if you’re not a Rockefeller or a Gates. By leaving an inheritance, you close the wealth gap between blacks and whites and empower your family to change the course of their lives. Studies have shown that people who receive significant inheritances are more likely to own homes, run their own businesses, and have higher incomes.
That can’t happen if we continue living by the old adage, “White people leave wills, and Black people leave bills!” If every new generation of Black children has to start from scratch financially, unlike other cultures that pass much of their wealth down from generation to generation, then white folks will continue to control most the wealth and black families will continue to manage the crumbs.
I’ve got two questions for you:
If not now, then when? If not you, then who? Want to know how other cultures do it? Want to know how you can break the cycle of single-generation consumption and leave a financial legacy for your family? First, turn to the Word of God for answers. Proverbs 13:22 says that,
“A good man leaves an inheritance to his children’s children.” In other words, a good man or woman leaves a little “something- something” for the grandbabies. (Imagine how different your life would be if your grandparents left a little stash for your college education or for a down payment on your first home.) To put a halt to the wealth disparity between black and white families, we’ve got to start preparing for the future instead of just buying for the here and now.
It’s easier than you think. You can build generational wealth by giving your family three things: 1) what you know 2) what you do and 3) what you have.
- The legacy of financial wisdom (what you know).
The Bible encourages us to teach what we know to the next generation. “These words, which I am commanding you today, shall be on your heart. You shall teach them diligently to your sons and shall talk of them when you sit in your house and when you walk by the way and when you lie down and when you rise up” (Deuteronomy 6:6-7 [bold type by author]).
What if someone had taught you about the stock market, real estate, credit scores, and the dangers of credit cards at a young age? Would you be in a better financial position today? Probably so.
That’s why it’s so important for us to share our financial wisdom and experiences with the next generation. Don’t make them relive the same mistakes that you experienced. Your words of wisdom can keep them out of a whole lot financial trouble.
- The legacy of good financial habits (what you do).
What we do always speaks louder than what we say. Our children, grandchildren, nieces and nephews might listen to what we tell them about money, but they’re more likely to follow what we do! That’s why it’s important to model good financial habits to them. Tithing, living below one’s means, saving and investing, and entrepreneurship are just a few financial and business principles we can demonstrate to the next generation. It’s also what God wants for us. Psalm 112:1-3 says, “How blessed is the man who fears the Lord, who greatly delights in his commandments. His descendants will be mighty on earth; the generation of the upright will be blessed. Wealth and riches are in his house, and his righteousness endures forever.” [bold type by author]
- The legacy of financial assets (what you have).
Once again, I restate Proverbs 13:22: “A good man leaves an inheritance to his children’s children.” Nothing from nothing leaves nothing! If you don’t have any money, you sure as heck can’t leave any for your family. The financial assets we accumulate and steward today should impact our grandchildren’s lives, not just our children’s. The only way that can happen is to develop a financial plan now; invest wisely (a checking account is not enough) and don’t spend what you don’t have (keeping up with the Jones’ can leave you broke).
Please, make sure you have adequate life insurance. I hope you live long enough to see your grandchildren graduate from college, but what if the Lord calls you home tomorrow? Who’s going to make sure your spouse, children and grandchildren have enough money to live the way you’d want them to?
The best way to take care of your family in the future is to plan for the future, read God’s word and live by it. Become a faithful steward and you and your family will be rewarded.