Helping our clients pursue financial wellness is central to our beliefs. As we see them shoulder more responsibility in an increasingly complex financial world, we believe that education plays an increasingly vital role in helping consumers understand their relationship with money and promote good financial behaviours. The broad definition of financial wellness is the ability of an individual to manage their finances for short-term needs while saving for mid- and long-term goals. (ref. Bank of America workplace insights)
Circumstances affecting financial well-being include income, education, employment, and unforeseen expenditure shocks. We believe the relationship between education and financial wellness is positively correlated. According to the CCPC survey, those who discussed money with their parents as a child or who were taught about managing money in school or college had greater confidence in their money management and financial decision-making.
We want our clients to develop what we call financial resilience. Although it is fair to say our clients are all above the age of 18 (and in fairness, you can add at least 20 years to that!), we strongly believe that if we could educate those under the age of 18, we would change the shape not only their financial future but that of our economy.
With this in mind, we want to help parents teach kids financial planning that will build on from age 1 to 18. Check out some simple tips below:
- If you can afford to put aside your child benefit payment, consider setting up a regular savings plan rather than depositing it. Invest it in a diversified fund and see the wonder of long-term investing and compounding.
- Show your kids money and explain the differences between the coins and the notes. The size, shapes and colours will be interesting (perhaps not the value!).
- Give your children money and let them pay for things when you are shopping, so they connect the purchase with the cost.
- If your kids get pocket money, why not use this as a super way of introducing them to conscious spending? Use a simple model of save, give, and spend. Some prefer to say share rather than give, but it teaches the youngsters to be conscious of what they do with their money. A good lesson for the adults too!
- Encourage the schools your children attend to avail of the financial literacy programme powered by Broker Ireland.
- If you can afford to avail of the annual gift exemption, start a savings plan for your children. This plan can continue indefinitely but must become available to your children when they turn 18. We use this with our clients to introduce their children officially to the world of financial planning, and boy, do they appreciate it.