Most parents want to help their children get off to a good start financially, whether it's by helping out with education, contributing to a home deposit or leaving them an inheritance. But have you considered introducing your adult children to your financial adviser?
Introducing your children to an adviser you already know and trust can be a good way to get them off to a good start. An adviser could help your children:
Develop good habits
While helping out with life events such as travel, buying a home or getting married are all important contributions, introducing your children to your financial adviser is less about the cash and more about teaching your children good financial habits. While your children's financial needs may be quite simple, a financial adviser can show them how to set goals, create and stick to a budget and start saving and investing. Not only can this help them manage debt and build wealth, but it will introduce them to lifelong skills that could set-them up for their financial future.
Get a foot on the investment ladder
While many young people put off starting to invest until they are older and earning more money , most underestimate the impact time can have on a small amount invested today. For example, even saving $50 per week into a high interest savings account at 5% p.a. interest, compounding monthly, you could end up as a balance of $33,644 after 10 years. So as you can see having 30+ years on your side can be quite a powerful investment tool, which is why it can be beneficial for your children to get started as soon as possible. If relevant, a financial adviser can set them up with a starter portfolio which is diversified against risk yet simple and low cost.
Start saving regularly
An adviser may also suggest a regular savings plan. This is a great way for your children to learn the value of saving and investing by watching their wealth grow. And if you would like a way to contribute to important life events and goals, this is also a great vehicle for you to do so by matching their savings dollar for dollar.
As your children start hitting major life events such as beginning their career, buying a home, getting married and starting a family, it may become more important for them to protect themselves against financial misfortune. A financial adviser can ensure they have the right protection plan in place to cover their most valuable assets - their new family, their lifestyle and their ability to earn an income-against financial ruin in the case of illness, injury and even death. They may even be able to help your children secure a better price on their premium through simple strategies such as investing through superannuation or accessing discount rates through an investment platform.
Manage an inheritance
When the time comes for you to pass your wealth onto your children, knowing they have good financial habits and a trusted adviser on their side may give you some peace of mind that they are being taken care of after you've gone. Better yet, estate planning with an adviser that understands the big family picture may help your final financial wishes to be met and minimise the tax your loved ones pay on their inheritance. When it comes to financial planning, the sooner your children start, the harder their investments can start to work for them, the sooner they'll develop good financial habits and the easier it will be for them to reach their goals. So if you've got an adviser you already know and trust, why not do your children a favour and make an introduction today?
MoneySmart; Effective interest rates and compound interest
This information is current as at 27/07/2015.
BT Financial Group - A Division of Westpac Banking Corporation. This document provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information does not constitute financial advice. It has been prepared without taking account of your objectives, financial situation or needs. Because of this, before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation and needs. Information in this blog that has been provided by third parties has not been independently verified and BT Financial Group is not in any way responsible for such information.