Are your children or grandchildren putting money away in savings?
If so, do you know what they are saving for?
With so much media coverage of first-time buyers and the often-stated struggle to save for a deposit, you could be forgiven for assuming that all millennials are scraping their pennies together to buy a house. However, a mortgage deposit is only fifth on the list of saving goals for 23-40-year olds (Source: TopCashback). The top four reasons include:
- Building an emergency fund (51%)
- Maintaining a savings cushion (43%)
- Achieving financial freedom (40%)
- Travelling and taking longer holidays (37%)
Of course, there’s nothing wrong with maintaining financial protections and putting money away for leisure and relaxation. But, failing to prepare for the bigger milestones in life will make them harder to plan if they become a priority.
What are these milestones?
For some, the landmarks in life might be quite traditional. Things such as buying a house, getting married and starting a family, for example. However, for others, the dream may be to start a business, or to be able to make retirement easier for their parents and grandparents when the time comes.
Interestingly, the research shows that just 14% are saving money with the intent of using it to raise children, while even less (13%) will use their savings to pay for their wedding.
Not all millennials (people born between 1977 and 1995) will want those things or regard them as occasions worth spending a lot of money on. Nevertheless, it is still important to save for life’s other eventualities, such as emergencies.
How can you make sure that your children and grandchildren are on the right track?
There are many ways to teach younger generations about savings and help them to find the right financial path for them, including:
- Talking to them: Sometimes the simplest option is the most effective. Asking your children or grandchildren what they want out of life can be a great conversation opener which will allow you to impart your saving-savvy knowledge and give them any tips you might have from your own savings journey.
It’s an important conversation to have, too. It is unlikely that they will get a substantial financial education at school, and you certainly can’t trust social media or other children to do the job. They need to get reliable financial information from somewhere, so why not you?
- Pocket money: If you want to instil more practical skills and attitudes toward money and savings, pocket money is a good place to start. Of course, this is age-dependent and is best suited to children who are still financially dependent (though your adult children probably wouldn’t say no to extra money every week!).
- Contributing to their savings: If you know that your loved ones are saving for something meaningful and you have considered helping them toward it, this may be the perfect opportunity to do so. This way, you can see the positive effects your money has on the recipient, while potentially reducing your estate’s Inheritance Tax liability.
- Accompanying them to get financial advice: Your own experience will go some way toward help your children to kick-start their savings. However, the advice of a professional can be invaluable in making sure they are saving effectively and using the right tools to make their money work for them.
To ensure that your loved ones are getting the most out of their savings journey and that they are using the most appropriate vehicles while taking advantage of all the available help, why not bring them to see us?
As independent financial advisers, we offer guidance, support and the opportunity to see things from a different angle. We can help them to make sure that they know what they are working towards and offer solutions and strategies to meet those goals faster. This often increases young adults’ financial confidence, while improving their knowledge of the products and schemes available to help them.
For more information, get in touch with Sarah or Bev on 0115 933 8433.
