Once reason I’m obsessed with teaching people how to budget and pay off debt successfully is so that they can build generational wealth. I wanted to dive deeper in this topic so I asked a true expert in this space to join me on the podcast today!
Mark Russell is a foster child turned financial educator. He’s comes from a low income family, and he put himself through college and paid off $80,000 in debt. After graduating, Mark spent much of his career at two of the largest financial institutions in the world, where he consulted 1000s of households on how to manage their money the right way. Now, he’s the owner and founder of Better Wallet, and he teaches people all around the world how to make money work for them. He has a mission to help people build generational wealth as he built his own.
Today, we’re talking the 5 factors that contribute to building generational wealth for you family!
What is Generational Wealth?
Marc: “I think sometimes a lot of people think generational wealth is just investing. I think it’s so much more than that. I think about it in five different ways.”
1. Learning About Money
Marc: “You need to know how money works, how it can work for you, and then also how it can not work in your favor. So number one is learning about money…I think about my family, I have the adoptive side of the family. And then I have my biological side of the family, my biological side of the family, they’re really open to that conversation. You know, I can talk to my mom and my dad about that…My my biological dad worked in real estate for a long time. He was a teacher. He was like me where you have like five different side hustles like he’s retired now. He drives Uber like he still does real estate on the side…But then my adopted mom isn’t really into it. It’s it’s a hard conversation to have with her because she kind of lived a life of not really having much at all. So when there’s this mindset, it’s a whole scarcity mindset that we’re working through. Unfortunately, my dad’s not here anymore. But luckily two of my parents are open to having that conversation. So I would definitely say it’s one of the factors of actually thinking about generational wealth, because they have to likely go and teach our siblings..in addition to me.. So yeah, so number one is learning about money. Definitely teaching your parents as well.”
2. Learning How to Manage Your Money Correctly
Marc: “Number two is learning how to manage your money correctly. So like investing and budgeting and all that stuff. Right? Paying off debt and things like that.”
3. Building Assets
Marc: “Number three is building assets. Like I think people forget about that. You want to build assets, and even more importantly, build assets that will help to pay you into the future. For me… I’m working on this financial literacy company. But also to think through like other opportunities that are out there, finding the challenges that people are having and providing a solution. That’s really what a business is. And now that I’m, what, seven months into better wallet full0time, I’m already thinking about like different business opportunities to solve challenges that may exist, right? Like I’m already thinking about…I’ll be moving down to Atlanta, and I’m already spotting opportunities. Like, there’s no really good gym in Atlanta. I’m like, why don’t I just put a gym down in Midtown Atlanta? Yeah, there’s a bunch of people just like me that would love to do that. So then next thing, you know, you’re building that out, right? So like, I’m constantly thinking through like opportunities that might exist. So something that might not be directly related to what their wallet truly is. So you know, building assets, and then building assets that are paying you that will eventually pay your kids.”
4. Teaching Your Kids About Money
Marc: “So number four, teaching your kids about money. It’s so important, because there’s a statistic that we talk about all the time in the financial advising world where most of the wealthy people out there, they end up losing their wealth within the first generation. And if they didn’t lose it within the first generation, or I should say the second generation, they’re likely going to lose it in the third generation. And the reason why is because their kids don’t know how to manage money. They don’t know how to manage your business. Maybe they didn’t, they didn’t pass the money to them tax efficiently. So like they lose 30 to 40% to just taxes, right? So it’s really important to not only build and educate yourself, you also have to educate your kids and know how they manage that money as well.”
5. Passing Wealth Down Tax Efficiently
Marc: “The last one is passing that wealth down tax efficiently. So we kind of covered it already. But the importance of not only teaching them and generating it and like making sure they’re managing it properly. But also make sure that when you pass it on to them, that you do it without having to pay Uncle Sam a bunch of money.
So number one, reach out to your your neighborhood CPA, or CFP, or more importantly, like an estate planner, they can walk you through all of that, especially if you have a good amount of wealth to pass on a good amount of investment or even if you have a business because they can walk you through those different strategies. One in particular would be like if you do have a business, there are ways like gifting strategies where you can pass on that wealth over time, let it be 510 years to make sure that they have full control of that business before you to view or to pass away or whatever might happen. Or if you’re not planning on passing away. If you’re just trying to pass that money, and wealth and business, different businesses to them, and you just want to get out the get out in business in general, then you can do that through different gift gifting strategies and limiting overall taxes that you will pay.”
What are the First 3 Steps I need to Take to Get on the Right Path to Building Generational Wealth?
1. Know where your money is going (Budget!!)
Marc: “It’s like playing defense and playing offense, understanding where your money’s going, giving every George Washington a job, making sure your money is not unemployed. Once you get that taken care of, that is a game changer. And so once you understand where your money is going, then it’s like, okay, how can I make more of this?”
2. Decrease your overall expenses and increase your overall income
Marc: If you’re that one person in your family has said, I’ve had enough! I want to end this cycle, then you have to know where your money’s going AND you have to eventually find ways to accumulate more money. Whether that be through increasing your salary or increasing your overall income.
Marc: “So decrease your overall expenses… increase your overall income. And then as you wind that gap, then you need to go and invest that money for either for you or for your family. And I would say the investing part tends to be the hardest part. Because a lot of us, we weren’t taught that growing up. And, you know, for me, even as a licensed financial advisor and stockbroker, like you would think that I would be very comfortable investing. I had to start off small to where I was just like, Okay, well, I’m gonna dabble in this one ETF that I hear a lot about, and we’ll see how it goes. And hopefully I don’t lose all my money. And you put money in and you find out that it’s fine. You know, you see the volatility, but over the long term, you see appreciation, you’re just like, Okay, well, if I keep doing this, what happens, and then over time, you see that compound interest. And that’s a complete game changer. When you see that you become addicted. And you’re just like, you start second guessing all the decisions that you make, like with your money, you’re just like, wait, I could go and buy these shoes. But I can also apply to my investments and buy this ETF. And if it grows, then I can buy three, four pairs of shoes, right? So it’s really a game changer. But it really starts with the basics of just knowing where your money’s going.”
Like Marc said, if you want to get onto the right path to building generational wealth it all starts with budgeting and giving every single dollar you earn a home! If you want to learn how to write a fully customizable budget for the life you want to live, join me for my free budget class below!