While some folks have managed to build wealth that will provide a decent retirement life for them, they are not actively and deliberately passing this knowledge to their children. This trend is worrisome because this is what often leads to families losing their wealth after a generation passes.
Parents play a critical role in the life of their children, and children tend to take instructions from their parents seriously. Therefore, it always sticks better when parents are the ones passing this knowledge. While retirement planning may not be the conventional knowledge parents pass to their kids, waiting until they are fully grown may be too late, as they will have formed habits that will prevent them from having a prosperous retirement.
Therefore, the best thing is to impact basic retirement planning skills into your kids and continue to cultivate them as they grow. This forms a seed that will help them to develop smarter financial decisions as adults.
Here are some tips on how parents and guardians can better prepare their children for retirement.
Show them some basic financial concepts
Your children might not be fully formed to understand the complex financial and retirement concepts, however, teaching them some basic financial concepts at this stage is necessary. For example, the basic concept of budgeting, target-date fund, income, and expenses; simple concepts like using stories and games stick with kids and help to drive the message home.
Also, in terms of financial discipline, teaching your children how to create a budget improves other aspects of their lives like goal setting and debt recovery.
Show them why they need to start early to save
While young people’s income may be low, encourage them to save regardless. The reason is to build the habit, not necessarily to become rich at that stage. It is those habits that eventually separate the wealthy from the poor.
Also, once they embark on this first step, guide them on the need to increase their savings, especially as their income increases.
Encourage them to consider companies with pension plan priority
Encourage them to look out for companies that have a pension plan, especially when in a dilemma of making choices between two great companies. It is easier to make a retirement contribution in an organisation where it already exists. With such companies, it is easier to make the monthly deduction from your salary by your employer for retirement than for you to save by yourself.
These seemingly simple financial tips can go a long way in determining your child’s financial future in retirement. Note that financial and retirement planning knowledge is not likely to be taught in schools, so it is up to you to equip them with these invaluable skills.
To learn more, seek professional advice. The importance of expert input cannot be overemphasized. At Oak Pensions, through Retirement Pensions Advisory Service, we offer retirement advisory services to our customers. You can reach our dedicated team of professionals via our multiple channels; www.oakpensions.com, info@oakpensions.com, telephone helplines, and social media accounts.
These seemingly simple financial tips can go a long way in determining your child’s financial future in retirement. Note that financial and retirement planning knowledge is not likely to be taught in schools, so it is up to you to equip them with these invaluable skills.
ABOUT THE AUTHOR:
Ernest Ademola Ehigie is a Copywriter, Content Developer, Author, Brand Consultant, and Communications Manager with over 5 years in marketing communications. He has written several articles, policy documents, press releases, radio and TV adverts for businesses and organizations. He's the author of the book, "Why You Must Lead" and currently works as a content manager for Detail and Avedia, a leading retail and media consulting firm.