What Is Generational Wealth, and How Does Housing Fit In?
At CommonBond, we believe affordable housing is at the core of every aspect of a person’s life. It’s the foundation on which families rely on, no matter their financial status, for safety and stability. Unfortunately, Minnesota has the worst housing shortage in the country, which accounts for all homes, not just subsidized housing. The amount of government-assisted affordable housing is even more scarce, as rents and costs of homes skyrocket.
“Affordable housing has been one of the primary attributes of our regional economic competitiveness, and that is no longer going to be true," Libby Starling of the Federal Reserve Bank of Minneapolis told the Star Tribune.
So what does this have to do with how to generate generational wealth? Though you might not think generational wealth is directly related to affordable housing, there actually is more of a connection between the two than you might think in how one generates generational wealth. Let’s break it down.
What Is Generational Wealth?
Generational wealth is wealth that gets passed down from generation to generation. Wealth can include money of course, but also other assets such as real estate, stocks and more. The families who have been able to generate generational wealth have an advantage over those that don’t. These people typically don’t struggle financially or have food or shelter insecurities.
Where Does Housing Fit In With Generational Wealth?
One of the greatest opportunities for generating generational wealth begins with homeownership. The problem is, a huge percentage of Minnesota’s low-income families are stuck under the poverty line due to a lack of affordable housing.
Rent and home prices continue to rise while the amount of government assistance, job and education opportunities, and other disparities that low-income families struggle with remain the same.
This leads to families being forced to spend the majority of their paychecks on rent they can’t afford. With most of their money going to rent, they don’t have the ability or opportunity to save. These savings could go toward a down payment on a home.
When families continue to struggle, there is nothing to pass on or ways to generate generational wealth.
How to Generate Generational Wealth
How can families who are struggling to make ends meet start generating generational wealth? With more access to affordable housing. Increasing the supply of affordable housing options means families would be able to spend much less on rent and give them the ability to build their savings.
With more opportunities to save come more opportunities to be able to purchase a home, which is one of the best ways for families to generate generational wealth. An asset like a home is an investment that can help support families for several generations as property can be passed down. This gives parents and their children an opportunity to build generational wealth that can pull them out of the poverty cycle.
How You Can Support Affordable Housing
CommonBond works hard to help low-income families build stable foundations with affordable housing. When more families have access to affordable housing, they’re more likely to be able to pull themselves above the poverty line and create better lives for themselves. Join our affordable housing mission and donate today!