We see it far too often.
People on the cusp of becoming an adult not having a solid foundation in practical financial matters or an understanding of the paperwork involved in being an adult. Without a proper grasp of the basics, including the importance of saving and why not to spend more than you make, a newly branded adult with their first income source runs the risk of racking up debt. Whether it’s an overly expensive car note, payday loans or a huge credit card bill so they can keep up with their friends, this type of unsecure debt can lead to a disastrous financial future.
It’s true the education system could be doing more to cover finances during the course of study, but we cannot expect schools to teach our children everything. There is simply too much to learn about the world to think this is a possibility. Because of this, it feels like it is our responsibility as parents to ensure our children learn how to understand and manage their finances. And yes, it is very important that some of these lessons are learned in the home.
What if instead of expecting ourselves to teach our children everything about the ins and outs of finances you take a bit of the pressure off and set them up for a meeting with a Financial Advisor? Yes, there will be a cost involved in the process, but this fee should be seen as an investment that can make the difference between your child making smart financial decisions in the future or mismanaging their money.
Parents are Know-It-Alls
We know it’s true that children often listen to outside influences more than to their parents. Teachers, friends, social media, almost anything other than us. This trend shows that it is highly likely financial advice and education coming from a professional will not fall on deaf ears the way it does when a parent waxes poetic about the value of money.
The financial advisor will also not have the emotional attachment and frustration that a parent will have. This can allow the conversation to be non-judgemental and progressive, removing the need for your child to defend or justify their spending habits, or feel the need to overpromise on the amount they can realistically save each month. It can lead to them feeling open and comfortable to both ask and answer difficult question about why they spend money on what they spend money on, what their financial hopes are and what is truly important to them in life.
Laying the Foundation
It is easy to see money come into your account and not think about what things cost as long as it keeps getting “approved.” And in the day and age of immediate gratification and next day online shopping, it is also easy to fall into the absent-minded trap of consumerism. Therefore, a solid place to start is with understanding your out goings and making a budget. A financial advisor can help your child assess their spending habits and point out choices which might not be to their advantage.
The advisor can then discuss the benefits of a budget and work with your child to come up with one that allows them to both enjoy their newly found income while managing impulse spending, as well as save for the future.
Sense of Security and Direction
Creating a direction of travel based around your child’s personal needs, wants and goals can allow their brain to focus in on why they are making financial sacrifices in the now. Do they want to own a home one day? Do they want to travel as much as possible? Have kids and a dog and retire at a reasonable age? It’s important to put these things into focus and a professional using facts and figures can go a long way into making the path clearer. Or at least a bit more clean.
It can also give them a sense of security for their future. That if they know they stay on the path, X has the most potential to turn into Y. Feeling secure in your habitual actions often makes a person less stressed when the unpredictable happens. For example, if you have saved an emergency fund as part of your planning and you get a flat tyre, you don’t need to stress about where the funds to cover it are coming from. Or if their friend decides to get married abroad, they have a savings pot to take from.
Becoming More Adult
Developing practical life skills factors into financial growth and independence. Learning the systematic and practical processes and tasks around money will give your child a sense of control and self-assuredness as they move into adult life. The more ownership a person takes over their decisions, the more engaged and understanding they will be of the process.
Like it or not, money is a huge part of life. Having a grasp on how it works and how you can make it work best for you can empower your child in a way that sparks independence. It can give them a sense of growth that they are making decisions that are not only better for them in the long run, but could also result in you as a parent feeling pride in their development. Not to mention the benefits it can have for their future savings, house deposit and retirement.
Set up for Success
But most of all, it shows your child that you care about them. Money can be a complicated and sensitive topic and it is possible that your children might not feel you understand what they are going through given the difference in the economic conditions of now vs when we were first starting out. It shows that you want the best for them and will give them the expert help and education they need to support a healthy financial life.
We all want the best for our children and sometimes we need to realise the best might be something we need to outsource. A pressure we take off ourselves and them. We cannot expect our children to be experts in everything about life any more than we can expect this from ourselves.
And if you have worked with an experience financial advisor you will know the benefit it has brought to your life. Why would we not want that for our children, too?