How to help with your children’s financial future

There is little doubt that most people want to secure their children’s financial future and usually, that can be summed up with just one word. Inheritance.

There is nothing wrong with wanting to leave your children an inheritance, in fact it’s natural for parents to want to leave something for their children when they are gone. A lifetime spent raising a family, working hard to own a home, maybe an investment property, some shares and other types of assets can be a windfall for those left behind. The desire to provide for our children runs deep in all of us.

However, if we look at the way the property market is heading, some could argue that our children will rely on their inheritance just to secure their own home. Given that unfortunate situation it’s concerning that there is a growing number of Australians that have to use the family home to fund their own retirement. So where does this changing landscape leave the notion of an inheritance?

Let’s take a different look at what you can do to help with your children’s financial future if an inheritance is taken out of the equation.

The basic problem with an inheritance is that it is only available after you have gone. You don’t get the satisfaction of seeing the benefits your generosity brings. Now don’t get us wrong, we’re not advocating for denying anyone an inheritance, though you can provide your children with something of much greater value.
You see, value can be found in unusual places. For example, assets that have material value, such as those that can be bought and sold for monetary gain make up the bulk of an inheritance. That’s pretty obvious isn’t it?

But value can take many forms because it can be passed on, or gifted, in different ways. More importantly, value doesn’t have to be tied in to material assets.
Believe it or not, most of our personal values come from our parents. We learn our basic behaviours by observing and copying our parents first of all, then our friends and peers as we get older. These behaviours include observing attitudes towards money. It’s easy to understand then, that children who see their parents fighting over money issues could believe that money was a negative. The other side of the coin would be kids who see their parents constantly buying things might be forgiven for thinking that money is only for spending.

It’s also interesting to consider that in each example, the amount of income involved is irrelevant. The people fighting over money might be earning six figure incomes while the people buying all the time may be low income earners living on credit, or the reverse could apply. Either way, it’s obvious that the ability to manage your money is not dependent on how much of it you have.
What is significant is that the children only see the end result of the attitudes their parents have toward money, played out through their actions. We all know that actions speak louder than words so teaching your children about the value of money lasts long after you are gone.

Teaching how to manage money has more value than giving money itself.

Perhaps you can start with making a budget. Over time, kids can see the interaction between income and expenses and the way that changes to either can affect the outcome. There are many lessons and benefits from using a budget but please don’t think this is only limited to young children.
It’s never too late to talk about managing finances. Just because your children are independent and working doesn’t mean you can’t talk about it. Besides, maybe you will learn something too!

Showing your children how you manage your financial position goes a long way to helping them understand, and then create a habit of, financial responsibility. Your gift has much more value than leaving behind simple physical assets. Giving your children a means to improve their financial position on their own is priceless.
Wouldn’t it be wonderful to watch your young children grow up, knowing they are forming a habit that will be the basis of a secure financial future?

Surely that has to be what every parent wants.

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