I just had a talk with my uncle about generational wealth.

He and his wife live in Manhattan Beach, one of the most affluent neighborhoods in Southern California .

He actually bought Landon Donovan’s house, and still gets his mail.

Here are some things he talked about: 

Most of the wealthy people he knows live extravagant lifestyles.

I brought up how some people make so much money, yet never create generational wealth due to spending habits.

He told me his own personal experience of this amongst his wealthy friends and neighbors. 

He told me that most of his neighbors own the most expensive cars and houses and take the most exorbitant vacations.

The less wealthier ones make about 2 million a year (still way more than is ample to create generational wealth). 

They buy super cars and take vacations to St. Thomas where they pay $50k to rent a yacht for a few days.

Because of all this spending, despite their high income, the value of their liquid assets are not very high. 

Their net worth is high, but the amount of cash and liquid money they can spend is low.

This handicaps them in terms of ability to allow their money to work hard for them. 

My uncle tells me he thinks of wealth in terms of units of freedom.

If he and his wife were to stop working right now, how long could they sustain their current lifestyle (providing for three kids in an expensive city) before their money runs dry? 

He told me their family is currently at 40 years of freedom. He and his wife are in their early-mid 40s.

He was very honest with me (which twitter isn’t many times).

He told me, “Money is tied with status because of what it can buy. It’s super hard not to overspend.” 

His friends, however, would last only a couple of years.

This is a scary thought especially if you have a job working for someone else.

If you lose this job, what will happen to you?

Where will you go? 

Even my uncle succumbs and goes on random splurges.

The trick is to minimize that and think long-term.

Obviously living like a miser is not living.

One must learn to optimize their wants vs. needs.

This will look different for everyone. 

However, everyone should be saving or investing at least something.

It doesn’t matter how much money you make if you just spend it all.

Think longer term.

This is why generational wealth is incredibly rare.

It’s hard to foster this discipline across generations. 

Money is tricky because it can consume you and destroy your life

But it can also be used to make the world more beautiful and build more life.

Money is a means not an end.

Understand that there is so much circulating around the world and you just need to find a way to grab it. 

But it is even easier to lose it all.

If you put hard work into making money, do yourself a favor and don’t let it slip out of your hands so easily.

Make it work hard for you.

Above all, be thankful for what you have.

Gratitude will protect you from being consumed by greed. 

If you need somewhere to get started check out

About the Author James Kaguima

James Kaguima is a entrepreneurial & compelling creator, with a passion for entrepreneurship & innovation in the Startup ecosystem & working on projects that has a Social impact on society & emerging markets

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