How Gen X Can Define First Generation Wealth For Themselves

By Lazetta Rainey Braxton, Next Avenue

Do you remember the point in your career when you realized that you made more money than one or both of your parents combined?

The moment for me came soon after graduation when I started working in corporate America. While my parents were elated about my career and salary, the income gap was a startling realization for me as their oldest child. I immediately recognized that my salary was barely enough to cover my living expenses, pay off debt, save for emergencies and retirement, and combine with my husband as a newly married couple in our 20s.

If my higher salary didn’t assure financial confidence in me, then my parents’ financial stress with lower salaries and three children must have been direr than I thought.

As I reflect on this realization, I now recognize that I earned the title “First Generation Wealth Builder” before I even knew it was a title.

Defining First Generation Wealth

Gen Xers are poised to realize the title of First Generation Wealth Builders as much as anyone. At this moment in time, many Gen Xers are homeowners and approaching their peak earning years; for some, the pandemic has also contributed to increased wealth-building opportunities according to recent data from the Federal Reserve.

Yet all is not equal. A McKinsey report estimates a $330 billion disparity between Black and white families in intergenerational wealth transfers with 60% of the gap accounted for by inheritances (approximately $200 billion annually). In short, many Black First Generation Wealth Builders started at zero financial wealth with a heavy burden to save and financially care for the generations ahead and behind.

While my parents were able to buy my used car for college (later passed on to my sister), my college tuition, living expenses, and loans were my responsibility. When I graduated from college, they didn’t have money to give me for my down payment on a new car or new home. They did the best they could with what they had. I was determined to discover what wealth would mean for me and my newly formed family and ensure that my parents would know wealth for themselves too.

Managing the Responsibility of First Generation Wealth

Witnessing your Silent Generation and Baby Boomer parents have “more month than money” as a child and young adult adds another level of intensity in breaking the cycle in your own life as a Gen Xer. Also, when inheritances are not in the equation, the pressure to turn income to wealth often carries a great deal of weight. With great achievement traditionally comes great responsibility.

Gen X First Generation Wealth Builder Tyrone Ross, co-founder and CEO of OnRamp Invest, a comprehensive cryptoasset management solution, views his responsibility as exposing and educating his family to things he has experienced in protecting and preserving wealth.

Ross shared his mission of “empowering my family with ongoing resources, educational tools, and networking a financial infrastructure that will allow the wealth to remain in the family for generations to come. I feel this tremendous responsibility to prepare for what’s coming and allow that preparedness to be the foundation for legacy and generational wealth.”

Position Your Family for Intergenerational Wealth 

As Gen Xers, we’re well into versions four or five of our five-year plans for life and career where we’ve outlined our goals and visions and worked to align them with our capabilities. Believe it or not, we’re only a decade or two from retirement which will be here in a blink of an eye.

Now is a good time to pause and reflect on how well we are living into our First Generation Wealth Builder title. What steps can we take to turn the tide on wealth intergenerationally?

Assess the strength of your net worth. If you used your assets to pay off all of your liabilities, would you have substantial money left over? This net worth calculation is a quick test to determine how well you are positioned financially if a major crisis happened. 

Confidence in net worth builds when you deploy the income in your high earning years to funding a solid cushion money market account, maxing out retirement accounts to include catch-up contributions, investing in taxable accounts and possibly real estate and other investments, while aggressively paying down your mortgage, credit cards and student loans. Identify your opportunity points and take a laser focus in the next rounds of your 5-year plans.

Consider long-term care for parents. Now in our prime earning years, Gen Xers play a critical role as the sandwich generation, raising families while supporting our parents. The pandemic unleashed untold strain and burden on so many families, and in particular, the caretakers who have both the financial and physical capacity to support their loved ones in need.

The burden is even greater for Black families. Statistics show that 34% of an African American’s annual income is spent on caregiving costs as compared to 14% of white caregivers, with nearly 1 in 4 African Americans as caregivers according to a CDC report. Caregiving greatly impacts key elements of wealth building—time and money.

Get a true picture of your parents’ financial situation, views on the aging journey and your capacity for supporting long-term care should your parents require assistance. Research long-term care policies for yourself to prevent possible future strain on your loved ones.

Incorporate self-care strategies. Finding the right strategy to care for yourself so you can in turn care for others is paramount. As my grandmother would say, “You can’t pour from an empty cup.”

Filling your cup could take the shape in many forms. Designate funds specifically as the “Extended Family Fund” as a financial reserve and boundary. Encourage open conversations with parents, siblings, and children regarding finances and shared contributions of time, money and energy. 

Courageously explore unwanted feelings of “Money FOG” (fear obligation and guilt), associated with being a high earner and wealth-builder in your family. Be sure to fill your cup and let it overflow to loved ones as we move through these particularly strained times. 

While the title of First Generation Wealth Builder can carry lofty responsibility, it also represents a badge of honor when securing a legacy of wealth for generations now and to come.