This Is How I am Building Generational Wealth
When you think of successful entrepreneurs, you may envision people enjoying lavish lifestyles and spending money freely. However, many of the wealthiest entrepreneurs got to where they are today by having frugal habits and not spending money where they didn’t have to. Living frugally allows them to preserve more of their wealth to put back into their businesses or pass it on to future generations.
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Brian Town is the CEO and founder of the award-winning marketing and branding agency, Michigan Creative. Before founding his company, he was a teacher. But his financial aspirations for his family meant that he had to leave the safety of his career and take a risk.
“My first career as a teacher, while rewarding, wasn’t going to create the kind of income I wanted, nor would it allow me to create generational wealth for my kids and grandkids,” said Town. “I knew I had to create something bigger than myself — something I could one day either sell to my kids or sell and use that money to help them do the same thing.”
Driven by the desire to build a family legacy, he left his teaching job and founded Michigan Creative. Here’s how he’s doing that.
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Build a Sustainable Business
Creating a business that will last can be the cornerstone of generational wealth. Town’s success with Michigan Creative is an example of how a solid business foundation can lead to prosperity.
Town’s success wasn’t instantaneous, but a sustainable business isn’t just about immediate profits. It’s about creating a model that can withstand a changing world.
“Now, 13 years later, we are generating seven figures a year,” said Town. “I have a five-year exit plan, own a building that will be paid off by then, and my wife, a PA, quit her job two years ago. She now runs a seven-figure med spa and owns her building. None of this would have been possible if we both hadn’t taken the leap to see what could happen.”
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Entrepreneurs like Town and his wife know that the longevity of their business directly impacts their ability to create wealth that can be passed down through generations.
“There have been sleepless nights, stressful days, and times when we both wanted to give up,” said Town. “But at the end of the day, it is all up to us. We created this, and we can decide what we want to do to create the future we want for ourselves and our four children. Worst-case scenario? We both have advanced degrees and can always get jobs. But why would we do that when our family’s legacy is in our hands to create?”
Live Below Your Means
One of the core principles of frugal entrepreneurship is living below your means. This involves keeping your lifestyle expenses well below your income level, even as your earnings grow. Many entrepreneurs make the mistake of inflating their spending as soon as they start making more money, locking themselves into unsustainable lifestyles.
Despite Brian Town’s business success, he and his wife avoid unnecessary expenses and focus on what truly matters.
“We eat at home together all the time,” said Town. “Eating out is easy, but expensive and not super healthy.”
This approach helps them reach their goal of achieving and maintaining generational wealth. They also look for other ways to save money, such as bringing their daughter to work.
“We both have flexible schedules so with our daughter we can pick her up and she can come to work with us without having to rely on daycare,” said Town.
Frugal entrepreneurs live modestly and keep unnecessary costs to a minimum. They look for ways to cut expenses wherever they can. Every dollar saved can be put back into the business and into building wealth for their children.
Establish Trusts and Estate Plans
Estate planning is the best way to be sure that family wealth is preserved and passed on to the next generation. The Town family made this kind of financial planning a priority.
“We have college funds set up for all the kids, whole life policies funded in their name, and legacy plans set up for both companies,” said Town. “All the children had Roths set up in their names when they were born.”
They worked with an advisor to set up legacy plans for their children, including the establishment of trusts and detailed estate plans. This protects their assets and provides a clear roadmap for their children’s financial future.
“We looked for long-term growth Roths and cash value life insurance plans,” said Town. “For the college funds we went with Michigan’s MESP 529 plan. We contribute what we can, but try to do a minimum for each child of $500 per month.”
A 529 plan is a special investment account that can be used, tax-free, for educational expenses. It’s a great way to make sure your children and grandchildren can go to college without going into debt.
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This article originally appeared on GOBankingRates.com: I’m a Frugal Entrepreneur: This Is How I am Building Generational Wealth
