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You Can’t Pass Down What You Don’t Own

Updated: Dec 1, 2022

Building generational wealth when you don’t come from money is hard—here’s how to beat the odds in a world that runs on rent, leases, and subscriptions.

Hive Wealth | Image for the Blog "You Can’t Pass Down What You Don’t Own". The image shows a woman and a man putting money into a giant house piggy bank

From housing and cars to software and apps, we live in a world run on rent, leases, and subscriptions. And unless you are among the wealthiest 1% that owns the lion’s share of companies, private equity, and a disproportionate amount of real estate, it can feel impossible to own anything—and that’s a bad thing for building generational wealth.


Sky-high rents and ongoing expenses can add up. And saving enough to buy a home, start a business, or invest can feel out of reach—especially when you don’t come from money. After all, those with generational wealth often have access to down payments, educational support, and trusts that help them get ahead in life.


With our tips, however, you might be closer to building generational wealth than you think. Here are some major blockers to building generational wealth and what you can do about them.


As a first-time homeowner, breaking into the real estate market is challenging—especially right now.


Between astronomical housing prices, interest rates, and inflation, it’s increasingly difficult for families to purchase a home, let alone pass it down to the next generation. Home appreciation hit a record high of 20.6% in March 2022, up from 19% the year before—and rent increased an average of 12% in the US last year—further exacerbating the wealth gap.


After all, paying your mortgage is an investment that helps you build lasting wealth that can be passed down to future generations. Paying rent just gives you a place to stay.


Some renters could technically set aside and invest the money they otherwise spend on home ownership. But most renters are spending extra cash on consumer goods and depreciating assets rather than investing in stocks and bonds. Not to mention soaring rental rates don’t leave much room for saving and investing unless you’re making a ton of money.


Case in point: a recent report found the median wealth of homeowner households was $254,900 in 2019—compared to $6,270 for renter households.


How to beat it: For those who are financially ready, buying a home can be a great way to build generational wealth—the housing market trends upwards over time. The steady payments on your mortgage can force you to save when you might otherwise spend. And people who own their homes and have paid off mortgages before retirement experience significant financial advantages in their golden years.


Get started by researching first-time homebuyers’ programs through federal agencies like the US Department of Housing and Urban Development and Federal Housing Finance Agency, independent agencies like the National Homebuyers Fund and Chenoa Fund, or even through your bank.


Keep in mind that homeownership isn’t a smart move for everyone, especially if you’re already struggling to make ends meet or fearful of job insecurity. And despite sky-high rents, you’ll probably save more money by renting (especially when you add up the real cost of buying and owning a home).


If you’re a renter and not ready to buy a home, you can actually make more money investing in the stock market than you would as a homeowner. Start by calculating how much you’re saving by not buying a house right now (don’t forget about insurance, taxes, and upkeep) and reinvest your savings into mutual funds and other low-risk investments. If you’re interested in real estate but not yet ready to commit to becoming a homeowner, crowdfunding is an excellent way to dip your toes into the market—you can start with as little as $10.


It isn’t easy to finance a successful business and pass it on to the next generation.


It goes without saying entrepreneurship takes grit and plenty of cash—those without funding are at a disadvantage. Whether you get funding from VCs or friends and family, your network makes all the difference. And if you don't come from generational wealth (including the money and connections), it can feel impossible to break into the startup world.


Regardless, you can’t swing a computer mouse without hitting a new startup or small business—and while starting a successful business is an incredible asset to pass on to the next generation, it could also turn on you and become a failed liability.


Even if you manage to start your own business and watch it take off in its initial years or even for decades, there's the challenge of passing it on to the next generation. If the next generation of ownership doesn’t know how to run the business—or worse, something unprecedented happens like a natural disaster or a pandemic—all your hard work could be for naught. An estimated 200,000 establishments closed their doors for good during the first year of the COVID-19 pandemic alone.


How to beat it: Work plenty of rainy day savings into your business budget—and funds for your successor’s business education, especially if you plan to keep everything in the family. It’s also worth researching assistance for small businesses through the US Department of Treasury.


Policies—or lack thereof—favor those with existing wealth.


There’s nothing stopping investors from purchasing houses, the federal minimum wage hasn’t changed since 2009, and many small businesses are still reeling from the pandemic. What can we do when policies still favor the wealthy, making obstacles harder to overcome year after year?


How to beat it: You can put more than your money to work to grow your wealth. Let your vote do some heavy lifting when it comes to government policies aimed at protecting families and individuals trying to build generational wealth.


These barriers to building generational wealth need more than habit changes—they require policy change. Get involved with your local policymakers and consider supporting laws regarding the housing market, rent control, minimum wage, and protection for small businesses.


How Hive Wealth Helps


A bird’s eye view of your finances is a click away in the Hive Wealth app. Maximize every dollar with the asset allocation tool and track where your money is going and how it’s growing. Keeping close tabs on what’s working and what isn’t will help you strategize your wealth-building and reach your goals faster.

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