Money Questions

Parents Lead The Way

When it comes to passing money sense onto our children many people are not sure where to start. During a recent conversation with one woman she asked us a question that was a very interesting one. Here is what she asked:

One of my children seems to live from paycheck to paycheck. He does not have any savings accounts for his children either. He and his wife stopped paying into the investment plans that I began for my grandchildren as well. They have no wills and they constantly let their life insurance policies lapse. I understand that times are hard for all of us, but I have always understood that if you have children you need to be certain that plans are set into place should anything happen to you. How can I convince my son and his wife to take better care of my grandchildren’s futures?

This was a loaded question to say the least. But, here are the best recommendations I knew to give and if you are reading this and you are in this situation - heed this advice:

First of all, this woman sounded like a very responsible mother and grandmother. I told her that there are several important benefits that will help her convince her son to follow a more responsible financial road for her grandchildren. I told her that the more she understood about her money, the more she would be able to talk to her son about money (and she was already on that road).

Here is what we should all do when dealing with educating our children about finances so they can in turn pass the same information down the line.

-         Talk to your children about money. Show them and even grandchildren (if necessary), by example, how to save and manage money. This will definitely help equip them for a lifetime of responsible financial decisions. Start pout when your children are just old enough to understand the value of a dollar. The younger the better.

-         Help your children put money away for collage as early on as you possibly can. If your children are older and have problems with responsibility (such as the lady who asked the above question?) help you older children with their children’s college funds. Show them that it is never too late to start being responsible. Some saved money is better than none at all.

-         Be certain that you buy enough insurance coverage to take care of your children should anything happen to you. The same goes for showing your children how to do it once they are adults. Always be certain that you are setting the example by have sufficient coverage yourself. Enough to cover your children and your grandchildren should you need to.

-         Your retirement is important. By saving for your retirement as early on as you can, you are setting an example for your children to follow in your footsteps. Teach your children the importance of setting enough money aside for retirement. Retirement accounts are a great way to save from taxing and more.

-         If you are able to, gift assets to your children. This is a great example of proper financial planning on your part. If you plan to leave your assets to your children, you may want to make annual gifts during your lifetime. Doing this not only reduces the value of your estate for tax reasons, but it also permits you to watch how your children use their gifts while you are still alive. You can share in their joy as well as teach them responsibilities while you are still able to.

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