Important finance lessons to teach your children

Written by Ronald Pratap

on September 14, 2020

The current financial landscape is constantly shifting and is still looking uncertain. As we start to look towards a path of pandemic recovery and with the Federal Government spending several hundred billion dollars on a support package, eventually, the country will need to foot the bill.

It’s certain that the economic effects of the pandemic will impact generations to come, so what financial lessons can we teach our children so that they are equipped with the skills and techniques they need for a prosperous future?

Start the conversation

Talking about money can be awkward for many families. You don’t need to tell your children the ins and outs of your personal financial situation, but keeping quiet can often lead to more questions and a tense atmosphere. It’s important for your kids’ future relationship with money that they feel financially literate and that they are comfortable discussing their situation and asking for advice or help if they need it. Depending on how old your children are, there are plenty of opportunities to bring up a conversation about cash – the trigger could be as simple as distributing pocket money, saving for a first car, working in a first job, or heading off to university.

Saving and budgeting

Lesson one – let’s start from the very beginning. The essence of encouraging a responsible financial attitude is helping your kids to understand how to manage their savings, calculate their expenses, and work on a budget for the future. Whether it’s discussing how many weeks’ pocket money will get them the toy of their dreams, helping them manage their income, or teaching them the basic principles of budgeting using something as simple as an Excel spreadsheet—incomings, outgoings, and a decent savings account make for a good foundation.

Investing

As your kids begin to accumulate more money, whether through work, gifts or inheritance, it’s worth explaining some of the basic principles of investing. They should understand the concepts of earning interest, risk management, and investment horizons. Depending on how much money they have to work with, you can tailor your discussions to suit. If larger lump-sum amounts, such as an inheritance, come into play, and you would like some professional advice, I would be very happy to talk through how best to structure a savings or investment account that will set them on a good path for the future.

Superannuation

It may seem a little scary, but it’s never too early to start thinking about super. As your kids enter the world of work, explain to them what the basic idea of superannuation is, and how it will benefit them in the long-term. Help them consider which type of super account might suit them, and you could even investigate some family options if it works for your situation. I’d be happy to discuss solutions with you and help you choose right provider for you.

Getting help

Your kids should know that there are people out there who can help them with their finances. Whether it’s making sure they’re aware of the government support available to them, offering them financial help or advice from your own pocket and experience, or pointing them in the direction of experts. As a financial adviser, I often work with whole families to create investment and savings plans that best suit the group. There are often ways of structuring savings and investments that can benefit you as well as your kids.

If you’d like support in setting your children up for financial success in the future, do get in touch with our team.

We are located in the Macarthur region with our office being in Oran Park. We service the greater Western Sydney region and are also available via zoom meetings if required.

 

 

 

The material shown in this article is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice.
Before acting on any of the information contained in this article you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives, and financial situation.
Whilst all care is taken in the preparation of this material, no warranty is given with respect to the information provided, and accordingly, no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by RP Wealth Management.

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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