Do you involve your family in your financial plans?
Financial planning is a critical process for financial success but many choose to take care of it alone or with their partner. However, there are a number of advantages that come with including your broader family in the process. If this is something you are not already doing, here are five advantages that come with including your family in your plans that you might want to consider:
1. It inspires younger generations to value the importance of financial planning and having a LifePlan
Including your family in your financial plans could bring a wealth of benefits to your family members. It can make it possible for them to consider their financial security in the long term, instil the right wealth management and investment principles, encourage them to think about their financial future and the steps required to make their financial wishes a reality. Furthermore, it might also make it possible for them to consider things that they might have dismissed previously. This might relate to considering the right retirement planning steps, the financial protection they require as well as the types of investments they should think about.
When they see the importance of the decisions you have to make, it will certainly make them more engaged with the process and help them to see the value of financial planning no matter what life stage they are in.
2. Help your family reach their own financial goals
While you might understand what your family members want to achieve, are you aware of the finer details? Once you begin discussing their goals, you might find that you want to assist them financially. This means that your own financial plan could change. According to FTAdviser, only 13% of parents aged over 60, have plans to hand their wealth over to their children throughout their lifetime. However, in some cases, a financial gift to your children or grandchildren, can have a far greater impact on their life than an inheritance. This could entail a financial gift that helps them buy their first home, setup their own business or whatever life goals they may have. With an idea of their plans, you might want to support them and see how your wealth can impact their goals.
3. Enable your family to make better decisions after discussing your inheritance
According to the FTAdviser report, 72% of parents want their wealth to be passed over to their children upon death. However, 66% of them never discuss inheritance with their children. While discussing inheritance and estate planning can prove to be a difficult topic, when you do so, you can help your family members better plan for their financial futures. If they think they will inherit more money than they actually do, they could make the wrong financial decisions. Or perhaps they are unaware of the inheritance tax they will need to pay. Being open and honest about your investments and inheritance plans, will ensure that they have a clear understanding of how they might be impacted by them.
You’ll also give them more time to think about their inheritance and how they could use it.
4. Your later-life plans will become clearer and confidence will grow
Discussing your retirement or later-life plans with your family is critical. However, 40% of parents have not discussed their long-term financial plans with their children*. It can be challenging to consider how your needs might change as you get older but it’s important to think about them to ensure you also create the right steps.
In fact, 33% of people aged between 30-59 are concerned about managing the finances of their parents when they become unable to do it themselves.* Through open discussions, you and your children will have a clearer understanding of how your wishes are to be followed. By including them in the process, they will also be able to make decisions based on your needs and plans.
5.Create a comprehensive estate plan and better manage inheritance tax
Surprisingly, around 8 out of 10 families do not have a strategy in place for estate planning. Under half of those also stated that their children understood their plans*. However, with a good estate plan in place, your loved ones will benefit in every way possible once you pass away. This can include considering inheritance tax and even making provisions for grandchildren. When you involve your family, you will be able to discuss concerns and put solutions in place that meet your needs.
Let us help you.
At Pyrmont, we understand the importance of having a LifePlan and involving your family in your wealth management or financial plans. We’ve helped many families in Hong Kong and beyond with their financial matters,and would be happy to assist yours. Contact us today to learn more about our award-winning, life-centred wealth management approach and how our financial planners can help you create a brighter financial future for you and your family.
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