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Financial Legacy: The Gift That Keeps on Giving

Financial Legacy: The Gift That Keeps on Giving

Introduction

As we approach the final stretch of 2023, it’s the perfect time for us to pause and reflect on the year we’re about to leave behind, and the new year to come. If you’re like me, you’re taking a moment to celebrate your achievements and thinking about the goals that you will set for yourself next year. Chances are you probably have a few personal and professional short-term goals, but what about those long-term goals? The goals that take years to achieve. The goals that even necessarily benefit you, but benefit those that come after you….

In keeping with the tradition of the holiday season and with this month’s theme of financial wellness, I’d like to write about one of the most important gifts we can give to someone else. A gift often forgotten and overlooked. The gift that keeps on giving…the gift of legacy. 

Understanding Legacy

According to the Oxford dictionary, there are several definitions for the word legacy. In the context of this article, I’m specifically referring to “an amount of money or property left to someone in a will.” This is the type of legacy that aims to leave something behind long after we’re gone. This type of legacy is the gift that keeps on giving to those who come after us, and it’s something that we should all strive for. 

Don’t get me wrong. Legacy is not all about money. It’s the sum of your personal values, accomplishments, and actions that resonate with people around you. (Perry, 2023). In short, it is the impact that you leave on the world and those who know you (directly or indirectly). It’s about what you do and how you do it. It can be positive or negative, and it’s up to you to choose which one you leave behind. A good legacy can inspire others and change the world for the better. It can be something as small as volunteering your time to support a local charity, or as big as launching a social enterprise that empowers people across the globe. A bad legacy can negatively shape beliefs, attitudes, and behaviors, keeping future generations stagnate and dependent for generations to come. Whatever it is, rather it be good or bad, your legacy matters.

The Importance of Financial Legacy

Leaving a financial legacy behind may sound like something reserved for super-rich, famous, or influential people, but anyone can leave behind a financial legacy. Far too often, and to no fault of their own (in most cases), the legacy of Black and Brown people includes a legacy of debt. Currently, White Americans hold 84% of total U.S. wealth but make up only 60% of the population—while Black Americans hold 4% of the wealth and make up 13% of the population. (McKay, 2022). And while there are many socioeconomic conditions that have caused this wealth gap over the years, Blacks and Browns must strive to be financially literate to put themselves in the best position to leave a financial legacy. Financial literacy is having a basic grasp of money matters and its four fundamental pillars: debt, budgeting, saving, and investing. It’s understanding how to build wealth throughout one’s life by leveraging the power of these pillars. It’s knowing how to Spend wisely, Save often, Borrow responsibly, and Plan for the future realistically. (Financial Health Tips, n.d.)

Financial literacy is a component of Financial Wellness which, according to the American Society of Wellness, is one of eight dimensions that contribute to overall health and wellness. Financial wellness encompasses all aspects of wellbeing pertaining to finances including knowledge and skills of financial planning and managing expenses, which can positively impact your overall health and wellness. This is why becoming financially literate and achieving financial wellness is of dire importance to communities of color.

How to leave a financial legacy

Leaving a financial legacy for family and loved ones is a thoughtful and impactful way to provide support beyond your lifetime. To ensure that future generations have a better start in life than past generations. Regardless of what you might think, you don’t have to specialize in financial planning or have a certain degree to do this, but you do need to consult with a financial advisor or estate planning professional for personalized advice. Here are 10 steps to conder when it comes to wealth planning and leaving a financial legacy.

Create a Comprehensive Financial Plan

  • Work with a financial advisor to create a comprehensive financial plan that aligns with your goals, taking into account investments, retirement savings, and insurance.

Establish an Estate Plan

  • Draft a will to specify how your assets should be distributed.
  • Consider setting up trusts to manage and distribute assets according to your wishes, providing potential tax advantages and control over how assets are used.

Life Insurance

  • Ensure you have adequate life insurance coverage to provide a financial cushion for your loved ones. The payout can help cover immediate expenses and provide long-term financial security.

Retirement Accounts

  • Designate beneficiaries for your retirement accounts. This ensures a smooth transfer of assets to your chosen heirs.

Invest Wisely

  • Diversify your investments to reduce risk. Consider long-term investment strategies that can generate wealth over time. (That’s right, overtime. Not overnight!)

Educate Yourself and Your Heirs

  • Provide financial education to your family, ensuring they are equipped to manage the assets they inherit responsibly.

Charitable Giving

  • Consider incorporating charitable giving into your legacy. Establishing a charitable foundation or including specific bequests in your will can contribute to causes you care about.

Regularly Review and Update

  • Life circumstances change, so it’s crucial to regularly review and update your financial and estate plans to reflect any changes in your family, assets, or goals.

Minimize Debt

  • Work towards minimizing outstanding debts to alleviate potential financial burdens on your heirs.

Legal Advice

  • Consult with an attorney to ensure that your estate plan is legally sound and aligns with current laws.

Conclusion

Legacy is the true gift that keeps on giving and financial legacy is something that we should all aim to leave behind, no matter how big or small the contribution. But legacy isn’t something that you achieve overnight. It’s a journey that takes time and effort. You must build up the ability to delay self-gratification and exercise patience as you navigate the learning curve of financial literacy. Don’t be discouraged if you don’t see immediate results. Keep taking small steps towards achieving your goal of financial wellness and trust the process. The legacy that you’re building is worth the effort and future generations will thank you later.

What legacy will you leave?….

References

#whatimreading “The Great Entrepreneur” by Matt Bird

See Also

Quisha Umemba

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