Generational wealth is money or assets that you accumulate and pass down to future generations. There are different ways to create and pass down generational wealth while you're alive, and you can also set up your estate to continue your legacy after you pass.

How to Build and Pass On Wealth

1.Gifts

You may have received gifts or an inheritance that helped you get ahead, or you could be the first in your family to have the opportunity to pass on wealth. In either case, building enough wealth to share starts with having a solid financial footing for yourself. Here are ways to get there:

2. Pay down high-interest debts

Sometimes it makes sense to invest rather than pay off certain debts more quickly, or to do both simultaneously. But generally, you want to make high-interest debt, such as credit card debt, a priority. There are several good strategies to pay down credit card debt; choose the one that works best for you.

3. Build savings

Creating an emergency fund for unexpected expenses and additional savings for short-term goals such as a car down payment or holiday spending will help you avoid turning to debt when you need money.

4 Save for retirement

Don't put off retirement until the last minute. You can continue building your savings and investing for retirement while paying down debts. Even if you don't end up giving the money directly to your heirs, having a well-funded retirement account can relieve some of the financial pressure your children may face as you age and give them space to build their own wealth.

5. Invest your money

Depending on your risk tolerance and strategy, you could look into stocks, bonds, cryptocurrency, mutual funds and other types of investments you can make outside of retirement accounts. Consider that the time horizon for investments you plan to pass on might be much longer than for your retirement funds.

6. Purchase property

Buying a home rather than renting can be helpful if you want to pass on generational wealth. Future generations can live in the home or rent it to have an additional income stream. If you have the extra funds, you could also look into purchasing investment properties that can create additional income sources.

7. Start a business

If you're entrepreneurial-minded, a family business can offer multiple opportunities for creating and passing on wealth. In addition to having a business that future generations can take over or sell, you may be able to employ your children. Your business can write off their pay as an expense, while the child's earned income can qualify them for a tax-advantaged IRA that they can use to build wealth from a young age.