Today I am featuring a guest post about our generational wealth transfer. Ben from BlueDollarBull.com, (based in New Zealand) provides valuable insight into how wealth transfer has changed over the years and how it has impacted society. Check out his page in the links below and don’t forget to sign up for my email updates at the bottom!
Imagine it’s the future, and say you’ve spent x number of years investing and now, you’re sitting on ‘your number’, or even more. Your pile of dosh [a Brittish slang word for money] now throws an appreciable income, with the excess reinvesting into this near endless resource.
You can live off of the income, and keep the growth going. You can live life the way you want on your terms, indefinitely. But what do you do with this wealth after…you? Now take a moment and step back in time. What if your parents, or their parents, or their parents, parents, parents did the same?…What about before then?
Step Into The Time Machine
Before banks were available to us common folk. Before the days of ETFs, stocks, and bonds. And before smartphones, phones or even 2 cups with strings tied between them (did that even work?). Wealth was in the value you could provide to your society(and still largely is).
And yes, there were kings, queens, god emperors and totalitarian rulers who had a much bigger slice of the proverbial pie(the edible kind, not funds) than most. But we’re not talking about the elite here. We’re talking about common folk, the villagers that kept the cogs of society turning.
This form of wealth came in the skill that was granted to them. Some, with enough hard work, luck and perseverance were granted apprenticeships and opportunities. But for a lot of people, they learned their skills from their parents.
What These Skills Meant
Those that had skills were able to build fountains of value for themselves. These were sources of revenue by creating things ‘from nothing’. Working the land handed to them by their parents. Or using their hands(or inherited tools!) to turn a lump of iron into tools or a pile of stones into bricks. Even turning said bricks into a house(some of which still stand to this day!).
It was this creation of value that was in and of itself, wealth. And the transfer of this wealth from one generation to the next came from the parents, or the previous generation teaching this skill to their children. This skill transfer led those who received it to be or become ‘relatively wealthy’. At least in comparison to those without these skills.
You could compare this to how the funds I mentioned you hypothetically have can become an asset which you can pass down to future generations. But so too are the skills and knowledge you hand as well. Both of these can also become a burden, but more about that over on my site.
The End of Wealth Transfer
At some point in history, this ‘value-producing-skill-set-wealth-transfer’ stopped. People had more opportunities to learn varying skill sets, which in turn cost capital to learn. People invested the coins, and eventually notes (and then digital ones and zeros) they had into themselves and their enterprises. They learned skills and created businesses in completely new fields that provided luxury, comfort, and convenience to a growing and modernizing society.
And this was good. Heck, if this didn’t happen you wouldn’t be reading the 490th word of this post on your digital device. And I didn’t even have to count that out. Or go back and retype this whole thing on my typewriter. Or copy it by hand like the scribes of old.
But alongside this came a change in the way wealth was handled and the way in which wealth was transferred. Basically…it wasn’t.
Descendants now had opportunities to enter new fields. Paying or being paid to train away from their family and friends in this exciting and changing world. Gain employment from other people who paid them a wage for their, ‘less than unique in their current society’ skills.
I don’t mean to put these skills in a negative light. The progress this specialized tutilage allowed for created massive and rapid progress. It was just a major shift in society for a lot of people. And with this shift, the traditional wealth transfer was lost to the development of society.
It was at this point that wealth creation became somewhat of a ‘secret of those who knew how’…if you catch what I mean. Most other people were forced to live hand to mouth, or, pay check to pay check if you prefer, due to ignorance.
Back to Modern Day
Bringing it back to the modern day, parents expect their children to go off and learn a skill to set them up for life on their own. This is just like when times changed to a more modern semblance. And, that’s great, there are plenty of opportunities in massively progressive fields that most of us can agree are fantastic. At least when compared to the days of yore.
And we don’t HAVE to learn our parents’ trade skill to create value in society and wealth for ourselves(though, I personally did). Times indeed have changed.
But just as times have changed, the ability to maintain wealth isn’t necessarily just in having the skill set to produce value. It’s also in our financial management skills. And this is something often neglected in our families. We go into massive debt to learn these skills, then without any training handed to us to ‘create wealth”. We then struggle to pay off these debts for 20-30 years, along with cars, homes and silly credit card purchases.
The jobs, freelancing, and businesses that come along with the skills we possess create this fountain of value which we trade for the common means of exchange(money). But modern wealth comes from the ability to keep this money OR keep this money flowing, in the form of reinvesting in ourselves, our skills, careers, and businesses.
It is this that will make you and all of your descendants ‘rich’. Just like in the times of old, where the (relatively) wealthy had skills to produce value, in modern days, we need to hand the skills of money management down to our children.
Whether you want to build intergenerational wealth for your family, or just make sure your children can keep what they create for themselves, there’s no reason why you should not be handing down the opportunity for them to have a chance to become rich.
Just like in old times, where the parent’s handed them over a trade skill. Now it’s up to you to hand your accumulated financial skill, the ability to create wealth, over to your children.
Quick Bit About Me
I’d like to thank Ryan for giving me the opportunity to write this post for ArrestYourDebt. Over on BlueDollarBull.com, I talk all about the transfer of wealth to intentionally prepare future generations.
This isn’t creating trust fund kids that need to outsource their shoelaces getting tied. It’s more about creating abundance that opens opportunities for your family and wealth that can make positive changes over generations in society.
I’d love to have you over on my corner of the internet to join the community. You can also check me out on my Youtube Channel.
Thanks heaps for reading,