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7 Challenges to Building Generational Wealth & Financial Wellness for First-Generation Builders

Updated: Aug 14, 2023

We all want our kids to have it easier than we did, or at the very least, we don't want them to be worse off. We want to move the financial needle enough, so that their starting point is further ahead than ours.

Who are first generation builders?

They are people who are the first in their families to accumulate significant financial assets. They include people from low income backgrounds, historically disadvantaged groups, and immigrants. In addition to wanting to build generational wealth, first-generation builders may also have the added pressure of breaking the cycle of poverty in their families.

These unique factors, and 7 additional ones explored below, present challenges for first-generation builders wanting to build generational wealth and financial wellness.

Family picture with different generations

Challenge #1: Lack of Financial Support and Foundation

The biggest drawback to building generational wealth for first-generation builders is the lack of an existing family legacy of wealth to build upon. They are starting from scratch and need to establish the foundation themselves. That means that there might be little room to implement wealth-building strategies, or recover from financial mistakes.

Challenge #2: Supporting Extended Family

Many first-generation builders support their extended families. Their support contributes to lifting other family members up financially, but it can also impact their ability to save and invest for their own future. This can hamper their personal and generational wealth-building efforts.

Challenge #3: Limited Networks and Social Capital

First-generation builders, especially immigrants, might have limited networks and connections, which can affect their access to job and business opportunities, business connections, and mentorship. These are essential for achieving upward mobility, and crucial for building wealth.

Challenge #4: Limited Exposure to Financial Strategies and Education

Our first introduction to money and financial management is from observing our parents, and from the lessons they teach us about money. For first-generation builders, exposure to wealth building strategies like investing is often limited. The extent of their financial education may be limited to the basics, like managing debt and saving money in a savings account.

Challenge #5: Risk Aversion and Lack of Confidence

First-generation builders are often inexperienced when it comes to managing large sums of money. This could lead to a lack of confidence and might make them more cautious when it comes to financial decisions. They are more likely to prioritize stability and security, while avoiding riskier investment strategies that could potentially yield higher returns.

Challenge #6: Pressure to Succeed

First-generation builders have a lot riding on their financial success. They must first build the foundation to support immediate needs, such as housing, education, and healthcare for themselves and their families, before thinking about long-term wealth-building. The pressure to succeed, and all that rides on it, can make first-generation builders reluctant to take actions that might jeopardize their current positions, even if it could potentially lead to better opportunities.

Challenge #7: Systemic Barriers

First-generation builders, especially those from historically disadvantaged groups, may face systemic barriers and discrimination that hinder their wealth-building. Discrimination in employment, housing, education, and lending can limit their ability to access high-paying jobs, affordable housing, quality education, and favorable financial services.

First-generation builders face unique challenges to building generational wealth and financial wellness. Recognizing and acknowledging these challenges help to understand the obstacles they need to overcome and the support they need.

Take the first step in building generational wealth and financial wellness. Schedule a complimentary 1:1 session.

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