8 Ways To Build Your Wealth While You Still Have Kids at Home
Written by
Cynthia Measom
Edited by
Jenna Klaverweiden
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“Building wealth when the kids are home is one of the great challenges that people face in their financial lives,” said Jennifer P. Kirby, fiduciary financial advisor and managing partner of Talisman Wealth Advisors.
“Typically, for middle- and upper-middle-class families, it’s less about being able to save, but more about the character of the savings. During this time, we see families directing a lot of cash flows to short and intermediate goals, such as cash reserves, college savings, home upgrades, family-sized cars, supplemental education and sports. These monies are more fungible and would not really be considered wealth building.”
Instead of waiting until you’ve raised your kids, here are some ways to build your wealth while they’re still at home.
Maximize Your Contributions
Kirby said the first step is budgeting and figuring out what you need now and what you can afford to save in the longer term.
“Maximizing contributions to employer-sponsored retirement plans like 401(k)s is a great starting point,” she said.
Kirby also noted that you can invest in employer-sponsored retirement plans more aggressively, depending on your timeline and appetite for risk, which, she said, is crucial for wealth building.
Create a Long-Term Savings Discipline
“If there is a surplus of after-tax dollars, the next step would be creating a long-term savings discipline that can also be invested and grow over time,” Kirby said. She said that even if you can save only a small amount at first, it’s still important to make the commitment.
“Sometimes, people take the view that small amounts aren’t worth it, but the amount can always be increased as income grows, or immediate cash flow demands decrease,” she said. “It’s as much about creating the discipline and growing accustomed to savings as anything.”
Set Up Automated Transfers
Kirby said her firm sees a lot of success with automated transfers to accounts designated for this purpose.
“In turn, those accounts can be invested to make sure the assets grow at the rate of inflation or more, which will also contribute to wealth building,” she added.
Invest In Income-Producing Real Estate
“In addition to investing in the markets, investment in income-producing real estate can be a significant builder of wealth over time and should be considered if means allow,” Kirby said. “The caution there is that liquidity will be important — the ability to put down adequate funds to purchase and reserves to maintain the property. But over time, this is a great diversifier and powerful complement to other forms of savings.”
Focus On Multiple Streams of Income
Keisha Blair — a Harvard-trained policy expert and economist, founder of the Institute on Holistic Wealth, and host of the “Holistic Wealth” podcast — recommended diversifying your sources of income to mitigate financial risks and increase earning potential.
“Consider pursuing side hustles, freelancing opportunities or starting a small business from home,” she said. “Multiple streams of income provide stability and flexibility, especially during uncertain times. Multiple streams of income are important for financial resilience and being able to weather life-changing setbacks.”
Plan For the Future
“Prepare for unexpected events by securing adequate insurance coverage, including health insurance, life insurance and disability insurance,” Blair said. “Create a comprehensive estate plan that includes wills, trusts and guardianship arrangements to protect your family’s future and legacy.”
Cultivate a Supportive Community
Blair also said you should surround yourself with like-minded individuals who have similar goals and financial values.
“Join parenting groups, financial forums or community organizations where you can exchange ideas, resources and support,” she suggested. “Lean on family and friends for emotional and practical assistance during challenging times.”
Practice Gratitude and Balance
Blair said that while you’re striving for financial success, also remember to make your family’s well-being and happiness a priority.
“Cultivate gratitude for the blessings in your life and celebrate milestones, both big and small,” she said. “Find a balance between work, family and self-care to maintain holistic wealth and fulfillment.”
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