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Banner generational wealth
By Shawnnette Fraser

• Apr. 7, 2021
District Vice President
TD Bank Group

When I was younger, I remember some of my friends talking about how they didn't need to pay for their university tuition, because their parents gifted them tuition. These were the same people whose parents often paid for their vacations, cars, and in some cases, bought them their first homes or provided their down payment for their first home.

There were two things these friends of mine had in common: they had access to generational wealth, and none of them were Black.

Simply put, generational wealth consists of assets passed down from one generation to the next. Most of the time this is in the form of an inheritance left behind for family members. But it can also be bequeathed property, investments or a business.

It's not going out on a limb to say that people who inherit generational wealth have a significant financial advantage over those who do not.

For many members of the Black community, generational wealth was a concept that simply was foreign to our situation.

But that's starting to change.

Bridging the divide

Building wealth to last generations is no easy feat, but it is a key tactic in bridging many financial gaps in the Black community.

Some of the reasons why the Black community has typically been left out of the generational wealth conversation are systemic. It's not that white parents necessarily worked harder than our parents, it's that in many cases, our parents were newcomers to Canada.

Black families, like many other immigrant families, often had to start from scratch. In some instances, Canadian Governments and standards bodies wouldn't recognize the education our parents had received in other countries. Often, our parents were paid less than their non-Black colleagues, and systemic racism meant they had to fight harder for equal opportunities.

These past generations were constantly fighting for equality, fighting for a job, and fighting for a seat at the table.

But because of the struggles of previous generations, our parents paved a path and kicked down barriers for us, and we now have the chance to make our children the first generation of Black Canadians of privilege.

Don't get me wrong, there is still plenty of bias, inequality and outright racism in our system to overcome, but we now have opportunities to provide generational wealth, as well as prepare our children to face their own financial hurdles.

By taking a few easy steps we can help ensure that a wider Black population benefits from a property, business or other asset that their parents leave behind. We need to focus on being intentional with our resources and incomes.

To generate wealth for your children, you first need to acquire assets or save money that you will not need for your retirement. This can often be difficult, but every little bit you set aside can help.

So, if your resources allow it, why not give our children a leg up by passing along a home or a down payment? Or by investing in a Registered Education Savings Plan so your kids might not have to work multiple jobs while doing post-secondary. Understanding the importance of creating financial opportunities to help the next generation is a key motivator to stay with your pledge to save what you can afford and see it through.

Getting the right advice

We also need to recognize that it's okay to seek out help. According to Chloe McKenzie, founder, president and CEO of BlackFem, Inc. – a non-profit focused on creating opportunities for women and girls of colour to build and sustain wealth – women, and especially Black women, are more likely to manage their finances themselves and not make use of financial resources or professionals, whereas those considered financially healthy are more likely to use financial advisors, online resources, and info sessions.

To help grow their wealth, I often advise clients to take advantage of the advice resources available to them through their bank or look at online tools to help them budget, save or educate themselves when it comes to managing their finances.

Another opportunity to help save for your children's future arises if you created a successful business. Did you know that there are lots of resources to help with succession planning should you choose to pass your business down to your children to ensure the business you built continues to grow and thrive? According to the U.S. Bureau of the Census, roughly 90 per cent of businesses in the United States are family businesses; however, according to the U.S. Bureau, only 30 per cent of owners successfully pass along the business to a family member.

It is important to get succession planning advice and to ensure that the person you want to inherit your business also wants to do so, so that you can show them what they need to know to keep the business running post-inheritance.

It's also important to get your own affairs in order. Consider whether life insurance is a good option for you. Create a will so you can control where your wealth goes instead of the courts. Make sure you name beneficiaries and set up any necessary custodial accounts.

After you take care of your own financial situation, safeguarding your family's future should be a crucial next step to consider.

Passing down healthy financial habits

Perhaps the most critical component of creating generational wealth comes in the form of financial literacy. I'm referring to passing on healthy financial habits. It's crucial that you teach your children about wealth and personal finances.

Do you take your children to the bank and show them how to save, or do they only see money when it is being spent? It's important for children to see how money can be used to build wealth.

For my nieces and nephews, I gave them each a saving, spending and donation jar. Then, every time I give them money, I let them choose which jar it will go into.

If Black Canadians are going to begin creating a legacy of generational wealth, we need to teach our kids these life skills early.

Access to generational wealth can provide the critical mass needed to bring financial stability, not only to your family, but to the broader Black community. It allows us to grow our capacity and improve our self-reliance, both as individuals, and as a community. And it's an opportunity for greater recognition and equity.

The American political scientist Kalu Ndukwe Kalu once said, "the things you do for yourself are gone when you are gone, but the things you do for others remain as your legacy."

Let's help change the narrative and opportunities available for Black Canadians.

Let's leave something for the next generation.

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