Generational Wealth: What it is, Why it Matters and How to Build it!
Generational wealth sounds like a serious, stuffy term thrown around at country clubs. Perhaps reading the words “generational wealth” made you think of trust fund babies. Or perhaps you envisioned Richard and Emily Gilmore sending Rory to Yale. However, generational wealth impacts more than just elites. In fact, your parent’s finances are one of the biggest determinates of your own wealth. For instance, if you’re born into the lowest social class in the US, there is a 50% chance you will remain there for the rest of your life. Even if your parents didn’t leave you an inheritance, you still may have benefited from generational wealth.
Generational wealth is any form of inheritance or financial assistance from parents or other family members. It’s basically wealth transfer from one generation to the next, whether that be in the form of billions of dollars, a college education, a home, a car, or even a cell phone.
In this article, Melanie of Partners in Fire does a deep dive into generational wealth. We all want what’s best for our children. Getting your own financial house in order can help you build some wealth, which can give your children advantages in the future. Melanie talks about how families that are in debt have “negative wealth” to pass onto their children. Melanie has lots of helpful tips about getting out of debt. One of her biggest tips is creating a budget– CountAbout can help with that! If you are financially stable, Melanie gives the best ways to share generational wealth. For instance, playing for your child’s cell phone bill frees up money for them to begin to establish their own wealth. Likewise, allowing your child to live in your house may give them the freedom to take an unpaid internship that will give them a major head start in their career. Check out the article for even more tips on passing along generational wealth.
The Difference Between Lifestyle Creep and Improving Your Life
If you’ve read any personal finance article ever, you’ve probably heard advice about avoiding “lifestyle creep”. What is lifestyle creep? It’s when luxuries in your life become essentials. Almost everyone in the US has undergone some sort of lifestyle creep. Maybe when you were in college, you were happy eating instant ramen and drinking Hamm’s. Now that you have a real job, you prefer filet mignon and Chilean wine. But how can you tell if your choices are causing lifestyle creep or if you’re really making your life better?
For a quick refresher, lifestyle creep is what happens when you don’t pay attention to your spending and become accustomed to a more expensive way of life. What used to be a nice luxury then becomes a necessity.
In this post, Darcy of We Want Guac talks about her plans to increase her spending next year by $3,000. Rather than let this extra money flow into her checking account unrestrained, she’s specifically allocated the money into three different categories: groceries, vacations, and transportation. By specifically targeting the extra money, Darcy is more likely to appreciate just how this money is making her life better. Darcy presents some specific questions to ask yourself so you can understand whether the purchase is lifestyle creep or a major life improvement. For instance, are you buying it because it’s expected of someone of your stature? If so, then it’s probably not something you should buy. Furthermore, if you can’t afford it, then the pain of buying it will likely be worse than the enjoyment of owning it. Finally, if you do make an unwise purchase, don’t beat yourself up. We all have moments of lifestyle creep. And that’s okay. Just try to have more wins than losses.
Parental Leave for Federal Employees
Having a baby is a major life milestone that comes with lots of financial implications. One of the biggest immediate questions that new parents need to answer is how much time to take off after the baby is born. Unlike other countries that have laws regarding paid parental leave, in the US each employer may make their own decisions. For many years, federal employees could take unpaid parental leave according to the Family Medical Leave Act (FMLA). They were also able to substitute sick leave for unpaid leave during the first 6 weeks after the birth. However, on October 1, 2020 new regulations will apply to federal employees who welcome a newborn into this world.
October 2020 marks a big change in the rules surrounding parental leave for executive branch employees of the US federal government. As a result, I wanted to put a post together highlighting the new parental leave policy to help federal employees who are expecting the birth of a child.
In this post, Gov Worker of GovernmentWorkerFI breaks down these changes. Called the “Federal Employee Paid Leave Act”, the law allows federal employees to take 12 weeks of paid leave when they have a child. The leave can be taken any time within the first year of the child’s birth and is awarded to both mothers and fathers. FEPLA leave is offered in place of FMLA leave; you cannot take more than 12 weeks combined between these two types of leave. For all of the gritty details of the FEPLA leave, check out the article.