Create Wealth and Confident, Financially Educated Children

All humans seek a life of significance. It is what gives us optimism, vitality, and creativity; it is that truly wondrous quality that sets us apart from all other animals. Rather than being satisfied with survival and immediate pleasure, humans at some point ponder the purpose of their journey and life experiences. Thankfully many of us come away from that reflection with the belief that we’ve learned things worth passing along for the benefit of our family and others. We also have amassed some valuable assets along the way like personal property and money that we want to leave them as a head start over where we had to begin, and to allow them to go further than we got. To use a football analogy, we’ve moved the football down the field during our lifetime and want to pass on the resources and knowledge to our children and others so that they may pick up from there, not from where we started. This is leaving a Financial Legacy.

Financial Legacy is made up of resources or assets, and education, or the knowledge and experience to steward those assets and continue to grow them. Most people think only of the assets when they think of an inheritance or are asked ‘Do you intend to leave a legacy to your children?’. This is the easiest and least important part of the puzzle; after all, it happens by default — if you have no plan and happen to have a large some of money at your death, you’ve left the resources, for better or worse. Is it for the better? That depends completely on how well you prepared the recipient. Think of gasoline, simply a resource that can be used for good (fuel in a cargo plane bringing food to the needy) or evil (fuel for an arsonist to destroy an enemy’s property). The difference is education, stewardship, and motivation of the new owner of those resources.

Successful business owners throughout history have clearly demonstrated that if you have the knowledge and drive, you can lose the money and other assets and quickly build them back. In contrast, thousands of lottery winners and unprepared descendants of first-generation wealth have demonstrated that receiving assets without education almost guarantees they will end up bankrupt in a short time. While financial education is the most important and most forgotten element to achieving generational wealth, it is only useful after the first generation has grown and held onto money and assets. Following are tools to grow and retain assets.

Growing Financial Assets – the Act of Saving.

The first principal to accept is the value of delayed gratification or spending less than you earn. It sounds simple enough, yet most of us know without consistent focus, making it a habit and automating it, few will be successful long term. Many will focus on how to reduce spending, and this can be effective for a while, yet like dieting it is seldom effective long term. All the abundantly minded individuals I surround myself with focus on increasing income instead.

In his book, Heads I Win, Tails You Lose, Patrick Donohoe introduces the next important step in a concept called Hierarchy of Wealth where he illustrates what successful business owners and investors have experienced throughout history but what is also ignored by market-focused financial advisors in America today. The key to successfully growing wealth with investments is to keep the risk of losing the funds as low as possible. You achieve that by focusing the money where you have the highest control like improving your own skills, your businesses, and your directly owned rental properties.

Retaining Financial Assets – the Act of Protecting.

For most financially successful families, annual income taxes and death (estate) taxes rob the family of all wealth in just 2-3 generations. The lack of knowledge and prudent planning to protect hard-earned dollars from annual income tax is the largest risk to retaining family wealth. Today the estate tax risk is only discussed by ultra-wealthy families, yet the nearly $25M exemption for couples’ estates is frequently under attack and is set to automatically reduce in 2026. Generational wealth families like the Rockefellers and, so far, the Waltons avoid these tax traps by storing and efficiently growing their assets where they are permanently protected from taxes. A foundational component to this is private family banks. In a previous article, I described this strategy often called “infinite banking” that uses a uniquely designed cash value whole life insurance policy to earn uninterrupted compound interest in a private, tax-advantaged account earning well above bank rates. It has been a cornerstone of finances for successful families since the beginning of America and is used similarly across the globe. It also provides the vital structure for teaching future generations about the concept of family banking, the stewardship of family assets for generations.

Conclusion

Growing and holding onto wealth requires continual focus and unique tax-efficient tools to be successful for generations. The funds must consistently grow to outpace inflation and be protected from the lethal impact of taxes, including while they are sitting in cash as reserves and in preparation for the next investment — wealthy families use infinite banking to achieve this. Once families become successful at limiting the impact of annual taxes, they must also prepare for death taxes at each generation — tax free death benefit from the infinite banking policies is again the solution. Take a deeper look at this 200-year proven approach to growing perpetual wealth.