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Most parents consider the benefits of leaving an inheritance for their children. It ensures they have a financial cushion and a safety net to fall back on, and may even allow them to make investments of their own, such as buying property. But as any parent who is trying to save money for their children’s future has come to realise, the financial conditions of today are more challenging than ever before. Here are four ways you can help your children become financially stable, instead of passing on financial burdens.
Teach Them Financial Discipline
In the UK, money and earnings are a somewhat taboo subject. But talking to your children about money from an early age has been shown to be influential in how they will handle their finances as they mature.
As the old adage goes, “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”. Teaching your children how to be financially responsible will help them use resources to become financially independent and responsible. Leaving an inheritance is more worthwhile if your children know how to spend wisely, invest, and save.
Plan Your Funeral
Another taboo subject, and yet another one that is so important: planning your funeral. You might think that funeral costs can come out of the inheritance, or sale of assets. However, it takes time for these issues to be legally settled, meaning many need to take out loans to cover the cost of a loved one’s funeral. By the time any inheritance comes through, the interest will have racked up and your children might end up with very little.
Avoid this trap by planning your funeral before you pass. Full funeral packages, such as those provided by Golden Charter, let you plan and pay for your funeral. The average cost of funeral expenses in the United Kingdom have risen by more than 90 percent in the last decade. Securing a funeral plan can save you and your family a significant amount of money, as well as easing the stress of funeral planning for those you leave behind.
Proactively monitor your credit cards and outstanding loans. Missing payments and not shopping around for good interest rates are just a few of the mistakes we make that can impact our children when we pass. This will also save you money, which you can add to the inheritance, or use to treat yourself with!
A good money-saving attitude to every day purchases can also ensure there’s more for the inheritance pot, and can be passed on to your children too. For example, choose store brands over premium brands where you can, and plan your grocery shopping to reduce cost and waste. It’s also a good idea to set up a good savings account for your children and encourage them to save regularly.
Perhaps the most effective tool for building wealth is to invest – intelligently, that is. Intelligent investing achieves the balance between maximum capital appreciation and minimum loss potential. If you’re unsure, an initial spend on a good financial adviser can result in reaping greater benefits in the long term.