Sometimes, we must step back and determine how we arrived at the unrealistic expectations we placed upon our kids and ourselves.
Is it fair to expect someone to build an empire within 60 or 70 years? However, when we kick kids out at age 18, we expect them to do that exactly.
From age 18, we expect our kids to pay for college, get married, raise a family, and fully fund a retirement for two. Is that feasible to you when you consider the intricacies?
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Each time a child steps out into life without our support, we lessen your chance to build generational wealth. Who benefits the most when our money leaves our families? Let’s get to the bottom of this question.
Generational wealth and the power of compounding. Compounding is the 8th wonder of the world, and the number one thing it needs is time.
Generational wealth is passing along your assets while keeping the power of compounding alive. This prevents the next generation from building new assets and starting from scratch.
Let’s take a gold coin, for example. Let’s say that my grandpa bought a gold coin for my mom the day she was born in 1955. The gold coin cost him $35.
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My mom holds onto it until she gives it to my son when he turns 18 next year. The gold coin is worth $2065 today. That’s an annual return of roughly 6.1%.
More importantly, what if my mom gave him 100 gold coins? That’s enough to purchase a home in a small city.
Being a good steward of our generational resources. As parents, we want to be good stewards of our resources to ensure our assets continue to compound.
Sometimes, we feel we don’t have enough resources to pass down to our kids, but our mindset is our greatest asset.
To build a base of assets for our children, we must consider generational wealth in everything we do. Let’s consider the idea of paying rent.
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The biggest mistake we can make as parents is letting our kids pay rent to anyone outside our family. If we can keep that rent money inside the family, we can build generational wealth early in their lifetimes. Life is a math game; we only need to find the common denominators.
The math of paying rent. I am writing this article after having a conversation with my 13-year-old son. We discussed the idea of living at home until he was 32.
My sons hope to serve in the military for at least four years, and I encourage them to come home after that. Here’s why.
I own three homes, but they all have mortgages currently. Currently, I have renters in my two properties other than my primary residence.
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When my son turns 32, the renters will have paid off the home. Meanwhile, he can save his monthly rent payment instead of paying rent to someone else.
Therefore, by age 32, my son could have a paid-off home and over $150,000 in cash (by saving $1,000/month). I repeat, a paid-off house and cash in hand by age 32. Simply amazing.
The crux of independence. You may think your kids won’t live at home until age 32. Why not? If you show them the path, most will follow.
We will indeed need to adjust to having adult children in the home instead of young kids. But having a paid-off home by age 32 is a godsend.
This new-age mindset that places independence as one’s top priority is definitely a Western take on the word “independence.” In most countries, families stick together for a lifetime.
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Who wins when your kids start paying rent at age 18? First, your kids go into debt to attend college and live in the dorms.
Then, they immediately get a job and start paying rent to some nameless and faceless landlord. They attempt to save for a down payment WHILE paying rent into someone else’s pockets. This is simply insanity.
We must break the cycle. If we don’t have hard assets to pass on to our children, we must work together until they obtain them.
The side benefit of working together. There is a massive side benefit to our kids living with us: they can find their true partners.
If someone they meet laughs at them for living at home, that person is not their future spouse. I promise that that same person wouldn’t be laughing when our kids own a home (free and clear) by age 32.
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Conversely, they may be a good fit if they meet someone who can see the long-term vision of wealth building. We must find our path to discover others who share a similar approach.
My story of leaving home. I left home at age 18 in 1999, joined the Marines, and served for 24 years.
I had no generational wealth, but my wife and I acquired assets along the way. Now, our mission is to ensure our kids start from a position of strength.
Currently, the best thing we have to offer is our wealth-building mindset. People assume that their kids need to become doctors that make $300,000 per year.
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However, if your kids own homes free-and-clear by age 32, how successful do they need to become? I’m sure they can live well, making $100,000 per year if they don’t have a house payment.
Generational wealth is so important because, in essence, we pass along time. Instead of our kids spending every waking minute becoming a powerful doctor, they will have much more free time.
We also can save the family money by providing childcare to our grandkids. It’s all a mindset that values family time and wealth-building versus being successful in the eyes of the world.
Conclusion. A wealthy mindset is not for everyone. Some still believe the American dream is making $500,000 a year while spending $600,000.
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Over the past year, I have concluded that building wealth is actually a series of small decisions focusing on the bigger picture.
A few bad decisions can derail one’s chances of becoming wealthy. The best thing we can do is work together as a family.
Our top goal is to prevent our kids from paying rent into someone else’s pocket. If we focus on saving rent, sharing cars, and providing our own childcare, that is money we can use to build generational wealth.
The capitalists want your kids to rent apartments and single-family residences from them. They are eager to transfer your kids’ hard work into their profits.
It is us versus them. The family that saves together stays together. They also build generational wealth so that the next generation has more compounding assets than before.
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My wife and I made it with no financial help from our parents. Trust me; it takes a different type of person to make it alone in a capitalist society.
Do you really want to bet your child has what it takes to build an empire alone? Or do you want to help them take a different path to wealth and happiness?
I want my boys to find success on their terms. They can become doctors, plumbers, or mechanics. But they should make these decisions without the fear of losing their homes.
Just like our gold coin that traveled 69 years, it’s our mission to keep the power of compounding alive for our kids. If we succeed, they can continue passing the coin to future generations. Good Luck!
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