Balancing family and financial futures

No matter the time of year, it’s always a good time to focus on your children’s finances. However, it’s important to think about how providing for them could affect your long-term security.

Many parents are concerned about their children’s financial futures. In fact, MoneyAge states that 35% of parents are worried they haven’t saved enough for their children’s future.

Moreover, FTAdviser notes that almost 50% of parents feel pressure to contribute to their children’s savings, even when it’s financially challenging.

This could mean that parents are more likely to sacrifice their own financial wellbeing to ensure their children have a strong start.

If you want to provide for your children now – either by creating a nest egg if your children are young, or perhaps offering a large financial gift to a young adult child – it’s important to make sure you’re still able to achieve your own goals.

Here’s how to find the balance.

Set clear financial goals to help you visualise your future

In many ways, effective financial planning hinges on establishing clear, measurable, and achievable goals. This applies equally to your children’s financial futures.

You can define specific goals you would like to achieve for yourself and your children, prioritising long-term goals over short-term desires. Be specific and, if it helps, set deadlines for yourself to ensure you stay on track.

Having these clear goals in place could make it easier to visualise what you want for the future, both for yourself and your children, serving as motivation to take action today.

Prioritise financial self-care to help create a secure future for everyone

The concept of “self-care” may initially make you think of spa days or relaxing with a good book. But in financial planning, self-care means recognising that investing in your financial wellbeing is not a selfish act. Rather, it’s an important part of creating a stable and secure future for your family.

This might mean reframing your narrative. Remember, prioritising your financial needs doesn’t mean you’re neglecting those of your children.

In fact, investing in your retirement, building an emergency fund, and maintaining disciplined habits, could strengthen your ability to provide for your children in the long run.

Practical planning and budgeting could help you outline your financial future

Achieving a financial balance between your needs and those of your child may seem like a fine line, but it doesn’t have to be. With effective budgeting and planning, you may be able to meet both your children’s financial needs and your own.

• Start by setting goals – what do you want to achieve for yourself and your kids?
• Give yourself a time frame in which to achieve your goals, making it easier to work out how much you need to save each month or year.
• Then, budget for how you’ll invest in your child’s future, such as their education, extracurricular activities, travel expenses, and Junior ISA or child pension contributions.
• Finally, outline your personal financial needs, including retirement savings, emergency fund contributions, later-life care savings, and personal investments.

Creating this separation can provide clarity in your long-term budget, making it easier to plan for the future. If you work with us at PenLife, we’ll use cashflow modelling software to help you support your children to achieve their goals, as well as your own.

Communicate openly with your family to make sure everyone is on the same page

Financial planning should ideally be a family exercise, particularly if you have a partner who is also contributing to your children’s financial future. Having open and honest conversations can help you both achieve your goals and even boost your children’s financial literacy.

Here are a few examples of communication habits you can establish with your partner:

• Have regular discussions about financial goals, budgets, and investment strategies.
• Ensure you are both aligned on financial priorities and decisions.
• Be transparent about income, expenses, and debt.
• Discuss and plan for major financial decisions together.

Here are different ways you can communicate with your children about money:

• Explain the concept of budgeting, saving, and responsible spending.
• Involve your children in age-appropriate financial discussions and decisions.
• Lead by example, demonstrating responsible financial behaviour.
• Discuss the goals you are setting for them and explain why you are doing it
• As they get older, be clear about what you are willing to pay for, and which goals they’ll need to self-fund.

By opening lines of communication in your family, you’re potentially empowering yourself, your partner, and your children to make responsible and appropriate financial decisions.

Remember, by encouraging an interest in early financial planning, you are helping your young family develop the tools they need to potentially achieve financial success and independence.

Be aware that individual financial security can benefit the whole family

The ripple effects of your financial security can extend far beyond your own personal wellbeing. In fact, it can create a cascade of positive outcomes for your children and family.

Being financially secure can help to reduce stress and anxiety within the household, creating a more stable environment. It can also help families weather unexpected expenses or events, such as a job loss or being unable to work due to illness.

Finally, by demonstrating what financial security looks like to your family, you might be making a role model of yourself. Your children may not be outwardly aware of the financial lessons you’re imparting, but they’ll certainly understand the benefits later in life.

Checking in with your plan and ensuring it still works for your needs and circumstances is key to ongoing financial security.

This is where the value of a Financial Planner comes in.

Get in touch

We can help you build, develop, and review your financial plan, even if you don’t have an existing strategy in place. If you want to explore more about how to include your children in your financial plan without sacrificing your own stability, talk to us.

If you’re already a client here at PenLife and want to discuss the issues you have learned about here, we can help you expand on your existing financial plan.

Contact your Financial Planner, or if you are new here, email us at enquiries@pen-life.co.uk or call 01904 661140 to find out how we can help you.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow planning.