When I was a child my parents didn’t communicate with each other about their finances. My Father took control and my Mother was pretty much left in the dark.
My Father had his own business and was successful in his own profession. When I look back at his life he had many financial opportunities, but, unfortunately, due to his lack of knowledge, financial education and not working with a professional Financial Planner, I feel he made a number of poor financial decisions.
I remember one thing my Mother did for my brother and me was to take out regular premium savings plans. We had no knowledge of these savings plans, but I was very pleasantly surprised when my plans matured and I had a little windfall.
Today, things are different. Couples are usually jointly involved in managing their personal finances and making decisions.
So, what about your own children?
Before you consider supporting your adult children, I recommend you talk to them about finances. The earlier you can educate them and get them to adopt good financial habits the better.
As soon as they are old enough give them a weekly allowance, but let them know they need to make it last – that way they will soon find out how to manage the money……..or not!
Once they are working, encourage them to make a contribution to living at home. They need to understand running a home costs money and, whilst they may be adding to the costs, they are also helping to cover those costs. They should ensure they have enough money to cover their own outgoings each month – travel costs, car insurance, fuel, going out etc.
I would also recommend them saving 10% of their salary each month – this is a great habit to get into and enables them to start building a little cushion and access to money for special purchases in the future.
Rather than jumping into buying a house, I would strongly recommend they consider renting first. Whether choosing to live with friends or a partner, they need to find out if they are compatible. Also they then find out what it is like to run a home – both financially and the house work involved!
Once they have covered all of their living expenses they can then see what is left over for fun at the end of the month! It will help to focus their minds on what is important.
If they leap into purchasing a house and subsequently their relationship breaks down, they will soon discover just how expensive the decision to buy a house straight away was.
Once they are ready to purchase a property, you need to decide if you want to help them with their deposit. Whilst that might be a one off gift, you will want to factor in doing the same for all of your children.
The earlier you can make the decision and start to plan your finances accordingly the better. If you start this when your children are much younger you can look at setting up a Junior ISA, which currently has an allowance of £9,000 per year. Obviously, this is a longer term investment, but it would mean you wouldn’t need to find a large sum of money at a later date, when finances maybe tight or not available.
You need to ask yourself, can you still afford to live your best life whilst supporting your children?
And if you need to compromise on your lifestyle to support them – are you OK with that?
Making the decision to support your children is a personal one, and only you can decide if you want to make that commitment.
If you would like help with calculating the financial impact on your life plan, please give me a call on 01344 875 310.