'Tell them you've booked an appointment with a financial advisor. Drive them there if you have to!'
Peter and Ann are in their 60’s. In a heartbreaking story familiar to too many of us, their adult son died soon after being diagnosed with cancer. Unprepared and underinsured, his death left his son’s wife and young children battling loss and uncertainty while dealing with a huge mortgage and limited income. Facing emotional and financial struggles, they were fearful of their future.
Doting grandparents, Peter and Ann stepped in to help where they could. They dipped into their retirement fund and accessed their superannuation in order to provide financial stability for their grandchildren. As wonderful as this is, the living expenses of a young family are relatively high and their retirement savings were eventually reduced to nothing, leaving Peter and Ann surviving on the aged pension. Not an ideal situation and not what they had planned.
This scenario was recently mentioned to me when speaking with a fellow adviser at a conference. It made me think ‘How do we teach our children to become financially independent?’
As parents, we teach our kids to be respectful, honest and upstanding humans. It’s also our duty to show them how to become financially savvy. Educating our children about financial matters is more than making sure they know how to budget and pay bills on time. It’s about long term financial independence; ensuring they know how to protect themselves, their future families and their assets.
According to a new survey of Americans aged 18 to 35 , How Young Adults Feel About Financial Independence From Their Parents, approximately two-thirds of young adults characterized support of 25 to 34-year-olds as a ‘bad thing’ because they want to achieve financial independence on their own.
In this fast-paced world, it is important to feel safe and secure. We all need to know that our hard work is paying off, and our financial situation is planned and sustainable. Part of this plan is to be prepared for the curve balls life can throw our way. None of us want to lecture our adult kids and tell them how they ‘should’ behave financially, and our adult kids certainly don’t want to listen to it! But we do need to know that they are protected against any unforeseen circumstances – for their sake and our own.
You can always gift your children a consultation with a financial adviser. Pay for them to attend a session to analyse their financial situation and plan for a secure and stable future. Encourage them to become financially independent on their own accord. And rest assured that their finances, and your retirement plan, will hopefully stay on track.