December 13, 2023

Why getting your children involved in your finances is good for everyone

Talking to your children about money can be complicated. So much so that some of us simply refuse to do it.

When asked in a 2017 survey of affluent US parents, only 17% said they’d shared their income before their child reached 18. A further 18% said they never would.

By far the most common reason for this refusal was that “it’s none of their business”.

Research does suggest the cost-of-living crisis has encouraged more of us to discuss finances openly with our children, but many of us are still sensitive about the topic. We may be worried a younger child might start bragging about how much money their parents make. And, as time goes on there’s the awkward topic about inheritance.

But we should fight against the instinct to keep quiet about money. Getting your children more involved in financial matters can be a good thing for all sides.

Breaking down the mystery of money

Firstly, those early conversations about money really matter.

Establishing good habits early on should lead to better (and less risky) financial decisions later in life.

We want to encourage more of this. We’ve mentioned in earlier blog posts about our library of videos which helps to bring to life important financial topics. These can be excellent conversation starters on some important need-to-know subjects. Recent videos include how to protect yourself from ever-more sophisticated scammers, the importance of making a will, and explaining complex arrangements such as power of attorney.

Transfer of wealth

This younger generation is either just entering the workforce or making steady progress up the career ladder. They’re on the receiving end of what’s predicted to be the largest wealth transfer in history. As reported here in the Financial Times, an estimated US$100 trillion is being transferred from baby boomers to their heirs and charities. Almost all these assets are going to people born after 1980.

Our clients often talk to us about wanting peace of mind. This extends to what they leave behind as well as what they have to spend now. As well as making sure their children and grandchildren have the funds to be financially secure, getting them involved in conversations about this wealth transfer – understanding the processes involved, ensuring they have the skills and knowhow to handle it – is vital.

With this in mind, we make sure our clients have access to all the tools they need to have these important conversations and everything in one place should they need to pass things on to the next generation. Our Client Hub has all the relevant documents that for you and your next of kin. Knowing what’s there, what to do in the event of an accident, will make everyone better prepared.

Several of our clients already involve their children in this way, helping them better understand their parents’ wishes for their money, as well as helping them learn how to invest for their own wealth. So getting the conversation started is good for the next generation, ensuring they’re more financially literate and prepared for big financial decisions they will one day have to make. And they’re good for you too as you can be assured any assets or inheritance you pass down will be in safe hands.

But family relationships can be complicated

Even though open and transparent conversations are really important, they’re not always possible. Sometimes having these discussions in a controlled, professional environment, with one of our advisers on hand as an objective pair of eyes and ears, can help.

To that end, as much as we’re here to support our clients, we always try to get to know your families too. We can make difficult discussions about wills, inheritance, or other aspects of your financial affairs easier to break down and easier to digest when the worst happens.

In a moment of such sadness, it’s a reminder that this business isn’t just about numbers. It’s building relationships with you and your family, making sure we’re there for the times you need us most.

Get in touch if you would like to discuss more on this subject.

December 13, 2023