Parents, grandparents, relatives and friends can help prepare children for their financial futures by investing and even small amounts can ultimately make a big difference.
Here are five key takeaways that can enable you to help children successfully navigate the financial challenges of adult life.
- Recognise the challenges. Some of the greatest costs of adulthood have risen rapidly in recent years, not least the costs of further education and of buying a home. As a result, preparing for these costs has become all the more urgent.
- Teach good habits. Children pick up core money habits between the ages of three and seven, irrespective of whether those habits are well-taught. Enabling a child to learn good habits should equip them for their future.
- Get the family involved. There is no need for good lessons and habits to be learnt in isolation, but reports state that parents and families are relatively poor at talking about money. Yet talking regularly and making plans together should enable better decisions.
- Recognise the long-term opportunity. Given the financial challenges of raising kids, many of us assume we could never make a meaningful investment for our children’s futures. However, if you start early, the power of compound interest can transform even small sums.
- Navigate the complexities. There are other incentives too, but they are not always easy to decipher, unless you have the experience. Understanding the risks and opportunities presented by your local tax regime could make those long-term goals easier to realise. In short, the challenges are significant but, with time on your side and a careful approach to planning, the opportunity to build now for your child’s financial future is well worth grasping.