Building wealth that lasts multiple generations is something that sounds out of reach to most people.
But, it is far closer to your grasp than you may realize. It doesn’t have the be restricted to the ultra-wealthy, or successful 7 figure plus entrepreneurs.
In this post you will learn about The Collective Method, an approach to building generational wealth that is in reach for every single family out there. By applying this form of collective capitalism, you can turn your family into a dynasty, no matter what your circumstances are.
Most public-facing fortunes have been built via The Great Accumulator Method. This skews public belief that generational wealth is reserved for the ultra-wealthy. This simply is not the case. There are a tonne of families outside of the public sphere you don’t hear about. In fact, these make up the majority of dynasties – even though they may not label themselves as such. They choose to, whether consciously or not, to keep to themselves and their communities. And because the public doesn’t hear about them, the public doesn’t even know they exist. Thus generational wealth seems out-of-reach for most people.
There are two core approaches(not counting hybrids) that the majority of these families use one is The Family Business. And the other is The Collective Method, which you’ll learn about in this post.
The Collective Method is the most accessible of the three methods. And no this has nothing to do with socialism or communism. The term ‘collective’ refers to ‘collective capitalism’. A mutual pooling of resources to apply capitalistic principles for the benefit of the family.
This isn’t a generational wealth-building method you will hear about very often. Firstly, because it probably isn’t going to propel you to public-facing stardom, and secondly because it isn’t…glamorous.
The Collective Method is a means in which a family pools their collective resources in order to alleviate the financial burdens of the first second and sometimes the third generation of a family. It’s hugely dependent on human capital, more so than any other method is reliant on its corresponding capital, and has a high propensity to fall apart without the strongest of familial ties.
Yet, human capital is the resource any family depends upon, and families aiming to build generational wealth need to spend a lot of effort to build human capital in order to attain any hope of achieving wealth that will last multiple generations.
And while generational wealth isn’t primarily about the money, this post is. What this post isn’t – is a good introduction to generational wealth. To learn more about building generational wealth if you’re new to the concept click here.
As I mentioned, The Collective Method is a way of pooling family capital to achieve a level of generational financial wealth and comfort that may not be easily attainable for a single generation on an average trajectory.
All empires are built on a good foundation
Often times this means purchasing assets that would otherwise be out of reach of any of the individuals in the family if they were to go it alone. This may mean multi-generational living or business arrangements.
It can mean the elderly founding parents of the family live with their children and perhaps even grandchildren, taking a greater(but non-invasive) role in assisting the upbringing of their family.
A lot of approaches found in The Collective Method may be considered sacrificial in the west, but other cultures consider the norm. The Collective Method is pretty uncommon in the west where relatively selfish, hedonic lifestyles are somehow considered more virtuous than traditional lifestyles, and this bleeds into parents that can’t wait to have an empty next. Yet in other countries, a lot of the arrangements, efforts, and sacrifices this methodology takes are considered admirable. But I’ll cover them as they come up.
Other times it can mean holding assets that appreciate in value over generations rather than a lifetime. This my mean real estate, sure, but collectibles, precious metals, and small enterprises may suit too.
Little Jimmy Fiction
I want to paint a narrative to act as a framework for explaining what this approach can accomplish. Plus it’s a fun way to elaborate and exemplify the points.
Little Jimmy Fiction grew up poor. His parents were alcoholics and paid him little mind. They pretty much left Jimmy to raise himself a lot of the time. After all, neglect is worse than abuse in a way, at least you know when you stand in an abusive relationship.
With little direction and guidance, and no support from family, there was little hope of attending college for Jimmy – he’s attended the college of YouTube and knows college will leave him trapped in debt in a saturated market. So he cut his teeth working the cash register at the local gas station, and severed toxic familial ties, wanting a fresh start.
So that brings us to 18-year-old Jimmy Fiction. An individual starting fresh in the world with an average high school education and no money or support from his family. I’ll add here, he isn’t going to become the next Bill Gates after discovering his hidden talent for making hot sauce and starting a hot sauce empire.
He soon meets Jenny, they fall in love and Jenny soon bears a surprise – she’s pregnant. Yes, young families are oft looked down upon in the western world, but until recently, large young families were normal. It wasn’t selfish to have children, and your bucket list and dreams weren’t destroyed in standard hedonistic fashion. Instead, your children became a part of your goals and ambitions, as any good parent will tell you.
And with these factors, what chance would Jimmy Fiction have at building generational wealth? I’ll add that he has no desire to build any sort of significant, scalable business as another caveat, as mentioned in the hot sauce comment earlier(if that was unclear). You’d think his chances were slim to none, right?
And here is where The Collective Method comes in best – it can serve as a platform for a family without the desire or risk appetite to create a large-scale business, and with low income to build generational wealth. As you’ll find out with Jimmy Fiction.
The Gradual Climb
Much like all generational financial wealth(and wealth building in general), sacrifice is at the core of this strategy.
Regardless of your income level or education, or debt, the objective is the create a modicum of wealth as your children mature. This doesn’t have to be a lot, I’m not talking millions, it just means living below your means as best you can, even if it takes extreme measures and saving to the best of your ability.
Remember that a family outlives any of the individuals within it. The whole idea behind the collective is putting the next generation in a better place than when you started out. And this is why centralizing your family culture to be supportive and tight-knit is crucially important. You need to put a huge emphasis on building your human capital.
This requires a stay at home parent. And I know what you’re thinking, Jimmy Fiction is already struggling, one income? Oh no.
It’s a tough climb, but nothing worth doing comes easy.
Investments in The Future of your Bloodline.
But here’s the thing. Children are investments in the future of your family name and bloodline, especially when it comes to building a dynasty. And for The Collective Method, a large family means more hands to stoke the fire. It also means more mouths to feed, and more struggle and strife raising a strong family. But ultimately, with proper peaceful, philosophical parenting, you will raise successful adult to continue your legacy and achieve great things in the world, in their own way.
With Jenny now staying at home in their newly rented apartment, living ultra frugally, and taking care of Jimmy as well as their newborn she is able to spend time taking care of the children and catering to Jimmy’s needs, freeing his time up to focus in on work.
With this allocation, Jimmy is now able to pick up some extra shifts at the gas station, and save up to buy a lawnmower to start mowing a few lawns a week. Or maybe he buys a vending machine(or ten), or maybe starts freelancing on the side. Whatever he does, it’s irrelevant.
Also, being a stay at home parent doesn’t mean being a pure financial dependent. It’s possible to make money from home through a variety of means. I don’t need to get into them here, but eBay reselling comes to mind. Using our family as an example, we have 2 enterprises that do this in order to to bring more money into the house, my wife pack the orders and handles the customer inquiries.
So now Jimmy is on the grind he has doubled his income, while the family remains frugal. Over the years they save up some money, Jimmy picks up new jobs thanks to his good work ethic. He also keeps up with his side hustle, bringing additional revenue in.
Jenny, as the founding mother and matriarch of the family, is playing her role too. She cooks meals every night, prepares Jimmy’s lunches and supports his side hustle, while selling a few things over eBay each day. She also, of course, continues to raise their growing family, now 3 children and spends her downtime learning more about parenting and instilling the hard-working ethic and family culture into their children.
And I’ll stress it again, as it’s is the most important aspect by a long mile. The family culture is being passed down to the children. This is why the stay at home parent is so imperative. In fact, having a stay-at-home parent is the single best move you can make towards creating a dynasty.
The kids see how hard-working their parents are, Jenny has put effort into showing them how much sacrifice her and Jimmy make and why. She explains to them the aim and goals of the family name. She isn’t authoritarian, but authoritative.
And through the authoritative, accepting, receptive, attentive parenting by Jenny and Jimmy, their family values are passed down to their children creating a tight-knit bond in their family. And so the years go on. Sure there are arguments, but as the family talks their issues through and resolves conflicts while making an attempt to understand one another, they are able to build a peaceful sense of togetherness, no matter how rough things get.
Without this family culture, the family would eventually grow apart, and every person in the family would only be working for and supporting themselves.
This culture of togetherness, acceptance, and openness lets the kids stay at home longer. The kids earn their own money young, maybe they pick up jobs, they may even help Jimmy with his side hustle(perhaps it even turn into a family business – not a concept for this story arc, however). This work so early in life gives the children an understanding of the value of money and of hard work.
Plus, as Jimmy has a purpose – building generational wealth. This purpose – his meaning of life – stokes his fire to work harder for his family name, and build a brighter future for the generations to come.
Living with purpose can make you a hero.
Speaking of the future, all Jimmy’s kids are now over 18 and working themselves.
As they still live at home. Not only do they pull their weight (maybe helping cook, helping in the garden by growing food and so on), but they pay board to their parents for their lodgings and food. These actions reduce the time investment in everyday chores and relieve some of the financial stress the Fiction Family has had for years.
The children also save up money as best they can, as a lot of their expenses are alleviated from staying at home longer.
But Jimmy and Jenny know of the Collective Method and have been working with this purpose.
After all the years of toil, the children have 10k each and Jimmy now has 70k.
Meaning, all together, they have $100,000 dollars.
Now each of the separate parties could go and attempt to purchase a home. Maybe not the kids depending on where and when this story is set, but let’s say they could. These kinds of deposits backed by a meager income aren’t going to buy much home, especially in the kid’s cases.
But this collective 100k, can buy a fiveplex(a building with 5 units which serve as self-contained homes). An asset the individuals involved may not be able to afford but as a collective, is within reach.
So they do. They pool their savings, and back it with their collective income. But they don’t live in it for free.
Instead, each individual/couple rent one of the units each off of the family funds for a discounted rate. The fiveplex they purchased is a bit run down, so they all spend their evenings fixing the place up. They still have one unit free too, which after some paint and new appliances, they rent out to a new tenant, creating an income stream for the family.
The rent the Fiction family pays to itself, plus the income from the fifth room pays off the mortgage, and any leftover gets plowed back into other investments or reduces the mortgage further.
This is the beauty of The Collective Method. It opens the doors to assets that would otherwise be inaccessible to individuals, while simultaneously improving the lives of the family members.
Note that the capital pool isn’t restricted to domiciles for the family. It may also be used to start a business, privately fund ventures, angel invest, purchase a rental or even a larger property with the spare rooms rented to produce more income for the family. The possibilities are endless.
Going forward, to continue growing this pool of capital, Jimmy’s family may agree to pay a fixed amount into the fund each month to continue to grow it.
In the case of your family, this part is entirely optional, though having a fixed amount and no withdrawals is definitely going to keep things fair. Whether you wait until later or make these a hard rule from a certain age is going to be entirely up to your family.
And how much, and if you even do this is entirely up to your family dynamic. These are the sorts of decisions to be made by your family council, which is a topic for another post.
Happily Ever After
Jimmy’s son takes the lead and becomes great at analyzing agricultural stocks, while one of Jimmy’s daughters has a knack for fashion and graphic design.
Jimmy’s son builds an agricultural stock portfolio with some of the family’s money, which pays him out a percentage of returns in exchange for management. Eventually, the profits are rolled into some private investments in farms and return a modest income for the family, and Jimmy Jr.
The daughter starts a print on demand store, and give a part of it’s profits to the family coffers in return for the startup costs incurred while she quit her job and started her business. She intends to build this into a larger family business and plans to bring her own son and her niece into the fold as the years tick by.
On top of all this, Jimmy and Jenny don’t wind up moving to a retirement village, which are designed to strip the elderly of their wealth, they stay with their children in their family sanctuary(the fiveplex). Help raise their grandchildren, grow vegetables in the family garden, and help manage the tenants in a second multiplex the family purchased.
We all know our stories go on, just with our legacy and children instead of us.
You can see how culture is so important here though. Without the strong open culture of acceptance, there is bound to be personality clashes in a family that go unresolved. Without a good work ethic, children may take the sacrifices made to afford higher opportunities for granted.
I am a firm believer that to create a great family culture, it takes one stay at home parent. Outsourcing parenting to organizations that cater to the lowest common denominator is both sad and ludicrous. These schools, daycares, after school programs and camps don’t have children’s or your family’s best interest in mind and are fast leading to the dissolution of a culture that took millennia of sacrifice, bloodshed, and bonding among families to form.
It all starts at home and you being a founding father and patriarch, or founding mother and matriarch need to become the best parent you can be to begin your dynasty. Pay attention to things like epigenetics and Maslow’s Hierarchy of Needs.
And for those going to argue you can’t get by on one income – you can.
My wife and I do, and have for years in one of the most expensive cities in the world. It took hard work and sacrifice while young and through doing this I built a financial foundation for our family. Nothing worth doing comes easy. If life is too easy for too long, you aren’t pushing yourself hard enough.
Having a stay at home parent frees the other one more to focus on building wealth, whether this is through additional time for money exchanges, upskilling of building a side hustle or business.
This is why the stay at home parent is crucial, it allows for a division of labor that allows higher potential levels to be reached for both parties. Besides, you can’t put a price on having a tight-knit family and raising quality human beings and these things need a stay-at-home parent.
The elderly Fiction Founding Parents are deep into their golden years. They have spent their time fulfilling life long pursuits and helping their children and grandchildren flourish.
Jimmy’s hand trembles as he strokes Jenny’s cheek while he lays on their bed in his home. He holds her close whispers something in her ear intended for her only, before closing his eyes one last time. Surrounded by his 3 children, 3 in-laws and 8 grandchildren.
People don’t remember the stubborn teenager that left his parents never to see them again. Nor do they remember the dark-eyed gas station attendant. They remember the man who sacrificed everything to afford his family the opportunity for abundance, the memories he gave and the man who always had time for his grandchildren. They remember the founding father of the Fiction Dynasty.
But the story goes on, not just with the elderly Jenny, but in all of his children and grandchildren and eventually their grandchildren. For we all descended from people who made sacrifices for our modern comforts and freedoms. Jimmy wasn’t the exception, he was an example of what the norm should be.