Talking to your loved ones about money can be one of the hardest conversations of all, as well as the most important. Here are some tips for those difficult financial conversations.
Talking to your parents
While no one likes to think about it, chances are that your parents may need some form of aged care in the near future.
So it makes sense to talk to your parents about their plans. While this is a sensitive topic, approach it from the position that you want to know what their wishes are so you can help make sure these are taken care of.
Find out if your parents have enough retirement savings to support their needs, and ask them what their wishes are if they can no longer live independently. Ensure they have a plan in place. If they don’t, consider an appointment with a financial planner.
Talking to your spouse
Retirement is approaching, perhaps faster than you think. So, it’s important for you and your spouse to reassess your own investments to ensure they’ll deliver the lifestyle you’re looking forward to.
If you haven’t already decided when and how you want to retire, start talking about it now. For example, would you like to retire completely? Or would you prefer a gradual transition? Perhaps you would like to consider using a Transition-To-Retirement (TTR) strategy, working part-time while drawing on your super savings?
If there’s a gap between your current level of savings and your retirement target, you also need to consider how to boost your super now. Begin by asking where you can save, then consider strategies such as salary sacrifice to build your savings faster.
Talking to your kids
At some point, almost all of us have thought “if only I’d known then what I know now!” While you can’t turn back the clock, you can give your children the benefit of your financial experience.
That includes explaining the advantages of investing early in life – ideally with a regular investment plan. Because the earlier they begin, the more time they have to earn returns on their returns.
For instance, if your children invested $1000 in product that earns seven per cent pa, then contributed $100 a week, they could build an investment worth more than $245,000 over 20 years. But if they waited 10 years before starting, they’d have less than $80,000 – a third as much.1
You can also help them to understand the difference between good debt – used to buy appreciating assets like property and shares – and bad debt – used for consumption, like holidays, general spending and assets that lose value over time, such as cars.
Most importantly, you can help them develop a long-term vision for a financially secure future. That could be the greatest gift you ever give them.
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Important information and disclaimer
Source
1 Based on returns of 7% with all earnings reinvested. This is a hypothetical example given as an approximate guide only. For more information, see the NAB Savings plan calculator
This information has been provided by MLC Investments Limited (ABN 30 002 641 661) and MLC Limited (ABN 90 000 000 402) members of the National Australia Bank group of companies, 105153 Miller Street, North Sydney 2060. This communication contains general information and may constitute general advice. Any advice in this communication has been prepared without taking account of individual objectives, financial situation or needs. It should not be relied upon as a substitute for financial or other specialist advice.
Any advice in this communication is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this communication we recommend that you consider whether it is appropriate for your personal circumstances. Any tax estimates are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.
