HOW TO PA $$ IT ON
Pritchett shared what you can do now to give your family a head start on a brighter future .
TO THE POINT :
THE WORST PLAN ? NO PLAN
| Save Money : Fiscal discipline is what comes to my mind first . You need to make and model choices that are consistent with building wealth , which means not spending money frivolously and being consistent about saving money .
| Have a Plan : Those best at building wealth are also those who know or learn how to boost their savings with tax efficiency . They learn how to reduce their tax drag , how to contribute to charity , and last , but not least , do good estate planning . That ’ s where the guidance of a professional comes in handy . Not making a plan is the fastest way to let taxes erode the wealth you worked hard to create .
| Invest Wisely : A lot of people are out there looking for the lottery stock , but that ’ s not a real strategy . We advise our clients to opt for the “ get rich slow scheme .” That means regularly making investments based on a plan and not having to dip into those investments because you spent too much or didn ’ t save enough . The key is letting the stock market work for you over time , not overnight .
| Prioritize Education : Teaching your kids about money is key , and the best way to do that is show them through your fiscal behavior . If you ’ re buying lavish cars , taking extravagant vacations and not managing debt , you ’ re setting that expectation , and it ’ s really hard to teach that away . You should also actively engage them ; talk to them about the choices you ’ re making and why .
According to Pritchett , other than lacking discipline , not addressing the idea of building wealth and just thinking it will build itself is the biggest mistake people make . “ Even if you create the wealth , without a plan , it can be challenging to know how to get it to the next generation in way that allows it to grow ,” he said . “ You have to ask , ‘ How can I protect this wealth even after I am gone ?’ Sometimes the answer means trust arrangements might be needed .”
WHY WAIT ?
You can start giving the next generation the benefits of the wealth you ’ re building now by paying for education and career development , helping them buy a house or car and handing down heirlooms , jewelry and art ahead of them receiving their inheritance .
| Use Life Insurance : It can play a big role , especially if you leverage its benefit to pay for any estate taxes due . Life insurance payouts are also tax free , making them a useful generational wealth vehicle . There is one problem though : timing . If you live longer , your policy could start to get really expensive , and that can counteract its usefulness . And you can build wealth without relying on life insurance . But again , this widely varies for each individual .
Shaw Pritchett , President and Wealth Advisor with Jackson Thornton Asset Management
CentrAL Inc ! 41