5 Ways To Start Building Generational Wealth With Just $20

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For many of us, achieving financial success and building generational wealth can be an uphill battle. But the truth is that with a bit of effort and dedication, you don’t have to have a lot of money to get started. With just $20, you can begin implementing strategies today, which will help you build your wealth for your future. 

In this article, we’ll look at exactly what generational wealth is, why it’s essential for financial success, and some ways that anyone can start building it with very little money.

What Is Generational Wealth?

Generational wealth is wealth that you can pass down from one generation to the next. This could be in cash, investments, real estate, or a family business.

Generational wealth can happen in a few different ways:

• Inheritance — When most people think about passing down wealth from one generation to the next, they think of inheritance. When a family member dies, their assets are passed along to the beneficiary of their estate.
• Gifting — Some families don’t want to wait for death to pass along their wealth. Instead, they choose to provide gifts to family members. This can be done so they have the opportunity to see the effects of this wealth transfer and also for tax purposes.
• Indirect Wealth Transfer — Wealth transfer doesn’t always need to be a direct transfer from one person to another. Some parents want to help pay for their child’s college education or provide them the funding to start their own business. These are ways to help set up generational wealth within a family.  

Why Is Generational Wealth Important?

The ability to build generational wealth is something that not all families will be able to achieve. However, if you can build something to pass down to future generations, it can help provide them with the resources needed for financial stability. Your future generations will be less likely to live paycheck to paycheck. They will be less likely to deal with the effects of debt. And most importantly, they can begin building even more generational wealth for their children.

What Are Some Challenges To Building Generational Wealth?

Building generational wealth isn’t an easy task. If it were, fewer people would struggle financially. One of the biggest challenges people face is a lack of financial literacy. Understanding how to choose suitable investments, knowing how to budget so you can continue growing your wealth, and even understanding how to start a business of your own. Without understanding these yourself or hiring the right people, it can be difficult to build wealth for generations to come.

Ways To Build Generational Wealth With Just $20

1. Start Investing As Soon As Possible

Investing is one of the most essential parts of building generational wealth for your family. The earlier you can start, the better off you will be. This will provide time for your money to compound and grow faster.

A recent CNBC Your Money Survey found that nearly 40% of Americans don’t contribute to an employer-sponsored retirement plan like a 401(k). Because most employers match 401(k) contributions up to a certain percentage, you’re throwing away free money.

Whether investing through an employer-sponsored retirement plan or a taxable investment account, you don’t need much money to start. Small investments made early and often can lead to significant money in the future.

2. Invest in Real Estate

Real Estate is another way to build significant wealth. The problem is that most people think they need a lot of money before getting started. However, there are options where you can start investing in real estate with $20 or less.

3. Real Estate Investment Trust (REIT)

One of the simplest ways to invest in real estate with little money is through a REIT. REITs give you the chance to invest in real estate without actually owning a physical property. They operate like a mutual fund, owning commercial properties like shopping malls, office buildings, hotels, and more. Many are traded publicly on stock exchanges, and each quarter, they pay out dividends to investors. 

4. Real Estate Crowdfunding

Over the past several years, real estate crowdfunding companies have made real estate investing accessible. While some are only open to accredited investors, others, like Fundrise, allow you to invest with as little as $10. 

Real Estate Crowdfunding companies purchase properties, both residential and commercial, giving a group of investors the chance to invest together.

5. Use a VA or USDA Loan To Buy a Home

You could use a VA or USDA loan to purchase a new home without a down payment. The one stipulation with these loans is that the home needs to be used as your primary residence. If you buy a duplex, you can live on one side and rent out the other, earning passive rental income. Alternatively, you could purchase a single-family home, live in it for a year, and then rent it as an investment property.

6. Have Life Insurance

Nobody wants to think about death, but it’s essential to prepare for it just in case the worst were to happen. A life insurance policy can help provide your beneficiaries with the necessary income to help replace your income for years to come. 

7. Pay For Your Child’s Education

If you’re a new parent, save a small amount of money each month for your child’s college education. By doing so, you will help them avoid student loan debt in the future, which can help them get a head start on wealth accumulation themselves when they’re older. 

Knowing that you’re helping your children avoid the financial pressures of debt when they’re older will be an added benefit as well.

8. Set Up an Estate Plan

Once you’ve accumulated wealth, you need to have a plan for how it will be passed down. Without an estate plan, your assets could end up in probate, costing time and money. Estate planning can help you minimize taxes when transferring wealth to your beneficiaries.

Setting up an estate plan is also the best way to avoid potential disputes between family members about how assets should be distributed upon your death. The estate will specifically detail your wishes for who should get what.

9. Start a Will

If you’re not at a point where you want to create an estate plan, you should at least have a will. This is a way to let others know how you’d like your assets distributed when you die. Without a will, you won’t have a say in where your assets go once you die. Instead, the state where you live would have the power to decide. 

The Bottom Line

Creating generational wealth for your family allows you to feel comfortable knowing they won’t worry about many of the common financial issues in life. And even though most people think it takes a large amount of money to create that kind of wealth for future generations, you can actually get started with $20 or even less.

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