For high-earning executives, creating wealth is just the beginning; safeguarding it and ensuring it can be managed effectively across generations presents a whole new set of challenges. Unanticipated events—be they health issues or significant life changes—can suddenly shift the responsibility of wealth management to less-prepared family members.
Are your spouse and children equipped to oversee the wealth you’ve meticulously cultivated?
Beyond essential risk management tools like insurance and estate planning, preparing your family to take on this responsibility is crucial to preserving your legacy.
Engaging Your Spouse in Financial Decisions
A fundamental step in fortifying your family’s financial understanding is to involve your spouse actively in your financial affairs. While the primary wealth creators often handle decision-making, increasing your spouse’s familiarity with your financial strategies reduces the future burden significantly.
Encourage them to participate in discussions with your financial advisors, accountants, and lawyers. This involvement isn’t just about understanding the figures but grasping the rationale behind each decision, ensuring they’re ready to make informed choices if necessary.
Educate and Engage Your Children: Preparing the Next Generation
Preparing your children to manage wealth requires patience, practical steps, and a long-term commitment to their financial education. While schools may not cover personal finance, you have the unique opportunity to lay a foundational understanding of money, savings, and budgeting.
Younger Children: Building Financial Foundations Through Fun and Practice
Financial education for younger children should start early and be engaging. Begin by teaching them the basics of money—how to earn, save, and spend responsibly. Interactive games and family discussions about finances can make learning both fun and impactful.
As they grow, introducing them to the concept of investing by allowing them to make small decisions with real consequences can be invaluable. For instance, if your family has a trust, you might allow them some influence over certain investment choices or match their savings to teach them about the rewards and responsibilities of investing.
Older Children: Empowering Responsible Investment Choices
For older children, managing a significant amount of money can be a transformative experience. Whether it’s a gift or a structured opportunity to invest $20,000 to $1 million, the critical lesson is in the responsibility of managing these funds. This could involve them making independent investment decisions or using the funds for long-term goals like retirement planning. Guiding them to invest in superannuation can be particularly effective, offering tax benefits and introducing them to the importance of planning for the future.
By providing your children with the autonomy to manage investments, you help them understand the complexities of financial growth and the importance of making informed decisions. This hands-on approach not only builds financial acumen but also instils a sense of ownership and responsibility.
Preparation Yields Confidence, Continuity, and a Lasting Legacy
Preparing your family to manage wealth is more than just teaching them about money; it’s about instilling values that will ensure the continuity and growth of your family’s legacy through generations. By actively involving your spouse and children in financial discussions and decisions, you create a robust support system that can uphold and advance the family’s financial achievements, even in unforeseen circumstances.
For personalised guidance on preparing your family to manage wealth and secure your legacy, contact us for a discovery call. We can help tailor a family wealth strategy that aligns with your goals and prepares your loved ones for a confident financial future.
Contact James Marshall at +61 (0) 7 3007 2080 or email contact@executivestrategies.com.au for a personalised consultation.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth ABN 54 139 889 535 AFSL 357306. This advice is general and does not take into account your objectives, financial situation or needs. You should not act on it without first obtaining professional financial advice specific to your circumstances.
This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.
