When you consider your financial plan, who do you involve? Often, it’s done independently or with a partner, but there could be advantages to making your wider family part of the process. If it’s not something you’re already doing, here are five reasons to involve children, grandchildren, and others in your plans.
1. It could encourage younger generations to consider their own financial plan
First, it could be beneficial to them. Being involved in your financial plan can mean they start thinking about their own long-term financial security.
While still working, it’s common not to think about retirement, even though the decisions professionals make, even early in their careers, can have an impact on the retirement they enjoy. Seeing the decisions you need to make about retirement and how to create an income could make them more engaged with the process and set them on the path to greater financial freedom. It could also mean they consider things they may have overlooked before, such as the need for financial protection, or when to choose investments over savings.
2. It can help you understand how to help your family reach their goals
You may know what your loved ones are hoping to achieve, but do you know the details? After talking through their goals, you may want to lend a financial helping hand and that could change your own financial plan.
According to an FTAdviser report, just 13% of parents over the age of 60 plan to pass on wealth to their children during their lifetime. However, in some cases, a gift now can have a far greater impact on their life than an inheritance will have.
Helping children and grandchildren to buy a home is a common example. With many of the younger generation struggling to save a deposit, a financial gift now could provide more security in the short and long term. If you knew this was a goal of your child, would you reduce their inheritance to provide a gift? By talking through their plans, you have an opportunity to understand how your wealth can have the greatest impact.
3. Discussing inheritances can lead to better financial decisions
The FTAdviser report found 72% of parents plan to pass on wealth to their children after their death. However, two-thirds said they rarely or never discuss inheritance with their children.
Talking about inheritance can be difficult and can bring up many emotions. Yet, it can help your loved ones plan their own futures more effectively. If they believe they’ll receive a greater inheritance than they actually will, they could be more reckless than they otherwise would be. Honest conversations about investment could also provide them with clarity and confidence about their future.
With more time to think about how they’d use an inheritance, your loved ones could make better financial decisions when they receive it.