Author: Tim Parker
Chartered Financial Planner, Associate Director - Member of the Investment Committee
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Published: August 2024
I will always be there as a sounding board for my children, if needed, when they are making decisions; financial or otherwise. Equally, I want them to have the tools to make those decisions for themselves and equip them for when I’m not around (that’s a whole different blog). One of the joys for me when they reached their teens and beyond, is we could have conversations about ‘adult stuff’ like finances – they took a bit more interest in what I do as a Chartered Financial Planner. However, the conversations with my son are different to those with my daughter. My son studied A-level Business Studies, so has more interest in the business world and the overlap this had with his course. My daughter is more focused on the end goal and how does she achieve the end objective, less about how she gets there.
Why am I talking about my children? Well, this can be mirrored in daily life for a financial planner; some clients come armed with a wealth of knowledge of investments and understanding of the strategy in place, including what could affect this. Some have less interest (not necessarily less knowledge), other than how we are going to achieve their objectives. But there is an education process for each, and adaptability required by the financial planner. It’s no different for children. It’s important to provide them with the tools for later life, they just usually have less experience of the world and may not understand why long-term planning can be so important.
So, what do those tools look like? Education for children may start with understanding how bank accounts work, how people use them and what interest rates actually mean. An objective for our clients may be passing on wealth to children or grandchildren. When a child reaches 18 and they can withdraw money from the Junior ISA, they may now have access to a large sum of money. What if they receive a large inheritance? What were you like at 18? This is where education around long-term planning comes into play – even the next 5 years can seem like long-term planning to an 18-year old! Also, let’s not forget the here and now and why budgeting can be important.
Discussing a Junior Pension can result in an interesting conversation when explaining they can’t be accessed until late into their 50s, maybe even 60s by the time they get there. But hold on, I get extra money put into my pension in the form of tax relief? OK, maybe there is an upside; it’s all part of the intergenerational planning we can provide for clients and their children/grandchildren.
We can’t tell them how to spend the money but can help them understand why saving for a house may be important; why buying a reliable car might be essential when they start their working life; why using it to help them through university can reduce the level of debt they take on in later life. However, you can only spend capital once.
We believe financial education for children is crucial in helping them make decisions for later life, but we will always be here for our clients to educate and support them along the way.
If you would like to talk to one of our Chartered Financial Planners, please contact us on 01223 233331 or email info@mmwealth.co.uk.
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Opinions constitute our judgment as of this date and are subject to change without warning. The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment.
The information contained within this blog is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.
