10 smart wealth-building strategies for families

Wondering how to build wealth as a family? Paying a little extra attention to your finances can help secure your family's future and help you learn valuable skills along the way.

Here are our 10 best wealth-building strategies for families.

1. Establishing a solid financial plan

Before you start anything, it's important to have a plan. Think about some financial goals you want to pursue as a family. Do you want to put your kids through college? Upgrade to a bigger home? Retire by a certain age? 

Start by assessing your current financial situation and setting clear, achievable goals. For example:

• Save $5,000 for an emergency fund within the next 12 months

• Pay off $10,000 in credit card debt over the next two years

• Contribute an extra 2% of your salary to your retirement account annually

It helps to think ahead when managing your money — generational wealth doesn't happen overnight! Consider inviting your kids into the conversation to help them start building strong personal finance habits early.

2. Create and stick to a budget

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Once you have some goals, it's time to examine your income and expenses. If you don't know how much money is coming in or going out, you won't know how much to save or use toward your goals. Keep track of regular expenses like utilities, gas, school lunches, and anything else your family spends money on.

Once you have a budget, it's important to stick to it! If you're consistently overspending in one area, look for other categories to cut back.

3. Eliminate high-interest debt

High-interest debt is a burden on your bank account and can cancel out any investment income. Credit cards are particularly draining as the interest rate is often over 20%. That means if you have $10,000 in credit card debt, you're paying over $2,000 in interest every year! 

To tackle high-interest debt, focus on the smallest loans first while making minimum payments on others. Then, take that payment and apply it to the next debt, repeating until all your high-interest debt is gone.

4. Build an emergency fund

Once you know how much money you need every month to live, start building an emergency fund. It's generally recommended to set aside three to six months of expenses in a traditional or high-yield savings account for easy access. A good starting point is to aim for $1,000, then gradually work toward that three- to six-month goal. This is also a great time to discuss saving with your kids!

Remember, emergency funds aren't there to make money; they exist to cover unexpected expenses and provide a financial safety net.

5. Contribute to retirement accounts

Once you've created a budget, eliminated high-interest debt, and built an emergency fund, it's time to focus on retirement. Many employers offer 401(k) plans with matching contributions, meaning they add money when you contribute up to a certain limit. Check with your human resources department about your company's policy; don't leave this free money on the table! 

There are other retirement accounts to open as well, such as a traditional or Roth IRA. The main difference between the two is that a traditional IRA is taxed when you withdraw money, while a Roth IRA is taxed when you contribute. Adding to these tax-advantaged accounts is one wealth-building strategy you don't want to neglect. 

The earlier you begin with any retirement planning, the more time your money has to grow through compound interest and market gains, potentially leading to a much larger nest egg by the time you retire. 

6. Develop multiple income streams

Now that you have a savings plan, how do you increase your income? While a raise or promotion at work might bring in more money later on, a side hustle — a second job, freelance work, or passive income — is something you can start right now! 

Multiple income streams can provide more flexibility to your budget, so consider putting that extra income into your retirement accounts or other investments. It may even be worth reinvesting in your side work if it can increase your profit.

Pro tip: Bring your kids in on your side hustle and show them the value of hard work and entrepreneurship. 

7. Embrace lifelong learning for financial literacy

Wealth management is a lifelong process that requires constant learning. As your family experiences changes — like getting a promotion, having kids, or moving to a new city — you may need to adjust your financial plan.

One way to embrace financial literacy is to regularly set aside time to review your financial goals and learn new strategies. Involving your kids in the discussion can also help strengthen their financial foundation, especially if you make it fun with games.

8. Practice conscious spending habits

Be mindful of your spending habits to help keep your family on track toward financial freedom. Before making a large purchase, ask yourself if it's truly worth it. Teach your kids to distinguish between needs and wants, and how to spend money mindfully.

The point is finding a balance that allows you to live well while building wealth. It can also help your family prioritize what matters most — whether that's going on vacations as a family or something entirely different. 

9. Manage risk strategically: Diversify

Investing always carries risk — that's why it's important to manage it carefully. When it comes to money, don’t put all your eggs in one basket. A diversified investment and savings portfolio can help manage risk and potentially increase returns.  

One investment strategy for diversification is investing in ETFs or exchange-traded funds. ETFs are a collection of different stocks, bonds, or commodities under one simple name so you don't have to invest in each individually. 

10. Real estate and primary residence investments

Real estate can be a great way to build wealth. As you pay down your mortgage, you build equity in your home — the part that you actually own. Consider making extra payments to pay off your mortgage faster. If you pay off your mortgage, all that extra money can be put into savings, retirement, or other investments.

If you're interested in real estate beyond your primary residence, rental properties can bring in extra income. However, make sure you understand and are ready to take on the responsibilities of being a landlord!

FAQs on building wealth

What are the best strategies to build wealth?

Start by creating a strong financial plan and realistic budget. With that foundation in place, eliminate high-interest debt and use tax-advantaged retirement accounts to maximize your savings.

What are five ways to increase your wealth?

1. Contribute to retirement accounts

2. Explore side hustles

3. Boost financial literacy

4. Practice conscious spending

5. Invest wisely

What are the four key things you need to build wealth?

1. A steady income

2. Good spending habits

3. Knowledge to make informed financial decisions

4. Wise investments to help your money grow over time

Want money-savvy kids? Start early with the Greenlight all-in-one money and safety app for families. Try Greenlight today.