March 10, 10:38 PM Newark Financial Planning and Strategy Examiner

By William Jiggetts

Money is not wealth. High income is not wealth. Of course, you need those to grow wealth but they are just tools for empire building. You also need credit, leverage and know-how. With those and other tools, you create comfort and peace of mind for your family and your legacy.

By definition, wealth is multi-generational so no matter how much money you have, it’s not wealth until it’s secured for your legacy. Therefore, in order to create wealth you have to prepare future generations to be wealthy.

For example…

Bill Gates is wealthy. He famously dropped out of college to start his company. What’s often missed is that Mr Gates dropped out of Harvard and borrowed money from his father to start his business. The senior Gates had prepared the way by seeing to his son’s education, supporting his ambition and by having the assets to support his son’s dream financially. Now, the Gates’ are very wealthy.

Donald Trump is another example. He did his first deal with money borrowed from his father. Dad got the cash by mortgaging his real estate holdings. The senior Trump was a developer. He had assets, credit, experience, connections and a belief that his son would make good on the opportunity with what he had learned about the business of real estate development.

The Graves Family wealth no doubt has a similar track. The Graves family runs a Media Empire of which Black Enterprise Magazine is the crown jewel. Earl Graves Senior and his wife have not only worked really hard and made a lot of money; they have prepared their family and their estate so that the earnings from his efforts will result in generations of wealth.

Again, money is not wealth…

Money goes away but wealth stays and grows. After you have planted the seed of wealth there needs to be a protected environment where wealth can grow. This is where estate planning comes in. Wills, trusts, income, asset and cash-flow protection, liability protection all have to be in place in order for money to grow to wealth.

There is no end of stories of lost fortunes and people who had money but are now broke. On the other hand, there are the estates that just don’t break no matter what. The Hilton Estate for example: Those girls couldn’t break that estate if they tried. Some say they have been trying.

This is an important example. The Hilton family does not live parsimoniously. They live like Hiltons. Having millions in the bank or under the mattress and being afraid to touch it for fear of running through it is not wealth. I don’t know what to call that, but it’s not cool. Wealth affords your life-style and continues to grow and leaves a legacy.

So, what do you need to do?

Develop a mind-set of planting a tree for someone else’s shade. If you are not wealthy already, you won’t be. You can get rich though. Do that. Use your assets and whatever else you can to plant wealth seeds for your legacy. Confucius said, “The best time to plant a tree is forty years ago. The second best time is now.” Remember, “Now” is going to be forty years ago in forty years. It shouldn’t still look like now.

Make and save a lot of money. See to your children’s education. Teach them what you know and support them in learning what they want to know. Send them to great colleges so they can learn what you can’t teach and so that they can meet the people who will be their important contacts later when it’s time for them to make a lot of money. Plan your estate now. Wealth grows within a protected environment. Even if you’re not wealthy now, set up the estate anyway. Investments, life insurance, etceteras should be held in trust. Outside of that, it’s just stacks of cash waiting for a wealth-eroding wind to blow it away. Get professional help with the details and minutiae. It’s important.

Simple. Not easy.

This is a repost from the Examiner.com