As parents (and grandparents), we all want to leave a lasting legacy for our children – something that goes beyond just financial assets and estate planning. While securing their future through inheritance is important, it’s equally essential to set them up for financial success from an early age.
The truth is that younger generations are struggling – rising costs of living and high interest rates fly in the face of mortgage-free parents. So it shouldn’t be surprising that we are talking to many clients who want to know how they can help their children be more financially prepared for the future.
Managing living costs and investing for their future
With inflation rising and the RBA refusing to say when interest rates will stop going up, many young Australians are wondering if they will ever be able to secure their own futures. Especially in competitive metro areas like Sydney and Melbourne where house prices are still going up, many parents have found themselves burdened with high mortgages and their adult children moving back home, making it difficult to save and invest for the future.
That’s why it’s becoming increasingly important for parents to look beyond traditional methods of financial assistance and consider long-term strategies that can set their children – and themselves – on the path to financial success.
One of the most impactful ways you can secure your child’s financial future is through education planning. For example, you might want to start a savings account for them as soon as they are born. By making consistent contributions into this account, you can build up a sizeable amount by the time they reach school age – particularly through the power of compound interest. This fund can then be used to cover the cost of private schooling or university.
Grandparents and longer life expectancy
As parents grapple with rising housing costs and more expensive mortgage repayments, the burden of funding private school fees is increasingly falling on grandparents. Many grandparents are stepping in to support their grandchildren’s education because they are in a position to do so, and they believe it’s the best way to help them have a positive future. This generational support can make a huge difference in your child’s life, opening doors that may have otherwise remained closed due to financial constraints.
The truth is also that Australians are simply living longer, which means we need to plan for a longer retirement period and build up enough savings to last well into old age. As parents, we want to ensure we can take care of ourselves in our golden years, especially so we don’t become a financial burden on our children. By adopting smart financial planning early on, you can create sustainable income streams that can support you and your family throughout your retirement years.
Guiding your descendants towards long-term financial success
While supporting your children with immediate expenses is important, there is immense value in helping to set them up for long-term financial success. As a parent, you can assist your children in building their financial literacy by teaching them about saving, investing and making intelligent financial decisions. Encouraging your kids to save and invest from a young age can instil valuable money-management skills that will last a lifetime.
Even if you feel like you’ve missed the golden opportunity to save for your own children, you can still play a vital role in securing your grandchildren’s future. By starting early and leveraging compound interest, even small contributions can grow into substantial assets over time.
The sooner your children start making savvy decisions with their own money, as well as avoiding costly errors and setbacks, the better their financial position and lifestyle will be in future years to come.
To navigate the complexities of financial planning and make more informed decisions, it’s always best to seek professional advice from the experts. Our qualified financial advisers will assess your current financial situation, identify your short- and long-term goals, and develop a comprehensive plan that’s tailored to your family’s needs. We can even provide insights into your various investment options, tax strategies and other financial tools that will set your children on the path to success.
As parents, the love for our children drives us to secure their financial future. Beyond simple estate planning, we have the opportunity to set them up for success from an early age. Remember that it’s never too late to make a positive impact. Smart decisions now can shape the lives of generations to come.
You will always want what’s best for your loved ones, at all stages of life. So why not start planning today? Seek advice and keep your plans up to date.