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  • Tag: Children and Money

    How to talk to aging parents about their financial affairs

    There comes a point when adult children should be asking certain questions of their parents to ensure that their financial affairs are in order. As parents age, achieving financial independence for retirement is a primary objective and effective planning should start well ahead of time. Similarly, planning for the smooth succession of assets on death is critical to maintaining family harmony through a difficult time. Here is a list of questions adult children should be asking their parents, now, to better plan for retirement and beyond.
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    A Young Adult’s Guide to Smart Spending

    We recently held the spring session of our popular NextWave program, an educational and networking based initiative that helps the next generation of our client families become more informed, confident and financially independent.

    On an evening in May, a group of young adults in their 20s and 30s gathered in our boardroom to discuss ‘how to spend money wisely’. Although this topic might seem somewhat prosaic, it attracted close to 40 ‘millennials’ and inspired a spirited discussion. The following concepts were discussed as a guide for young adults to make smart spending decisions and more effectively build and manage wealth.

    Live a comfortable life, not a wasteful one. Many ‘Gen Y’ individuals have never experienced real financial hardship. The downside of this is that it can sometimes lead to overconfidence and overspending, rather than saving for ‘rainy days’ or to achieve financial independence.
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    Are your adult children financially astute?

    Adult children of wealthy families are not prepared to handle wealth. That is one of the most common concerns among Newport Private Wealth’s hundreds of wealthy clients. Wealthy baby boomers are moving into their golden years, planning for the succession of assets and realizing their adult children don’t have the necessary skills to effectively manage wealth.

    A U.S. Trust study last year confirmed that very few high net worth individuals believe their children would be mature enough to handle wealth before the age of 25 and more than a quarter think they won’t be ready before the age of 40. (1)

    Why is this so? Financial planning, risk vs. return, asset allocation, budgeting and tax minimization aren’t concepts that are taught in our schools and universities. Discussing the family’s wealth isn’t something most families raise at the dinner table. Yet, ironically, parents want to ensure their children, as heirs, (1) don’t squander inherited wealth; and (2) don’t lose sight of family values because of it. [read more >>]

    Passing wealth on now, later, ever?

    Today’s Globe & Mail High Net Worth section featured Newport Private Wealth in a piece by journalist Paul Brent entitled Don’t let your money spoil the kids.

    It deals with the issues, desires, opportunities and complications of wealthy baby boomers assisting their offspring financially — a subject that’s near and dear to our hearts and on which several of our colleagues have blogged. You can also read David Lloyd’s post on Catalyst Funding and Kevin Dean’s Engaging the Next Generation.

    For high net worth families concerned about preparing the next generation for responsible wealth management, remember that we offer an educational program for young adults, NextWave. Contact Caitlin Lloyd or Kevin Dean to learn more.

    Engaging the next generation

    At the end of November we held our launch event for NextWave, Newport Private Wealth’s initiative for young adults to help them become better equipped at managing wealth.

    We had a tremendous turnout with over 40 young adults in attendance for an evening of networking and a brief introduction to the concept of NextWave, as well as introductory topics that will lead into our future events. Feedback from attendees was enthusiastic: “These are exactly the kinds of questions I have but I don’t know who to talk to” and “I was so happy that I actually understood what you were talking about because I feel totally underprepared when it comes to financials”.

    The feedback confirmed our belief that there is a strong desire to learn. Young adults want to take more responsibility, but with little in hard financial assets early in their careers they feel like they don’t have access to qualified individuals to discuss their concerns. [read more >>]

    Values based wealth management

    Earlier this month, we hosted another in our series of Inside the Tent events for clients and friends. This time the topic was personal: Net worth. Self worth. What values will you pass on?

    How do we make sure our money doesn’t mess up our family?

    How much financial support should we give our kids?

    How do we create a sense of generosity and not entitlement?

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    The top 10 things our children should know about money

    Many of my clients have adult children graduating from university and starting a new career. For many it’s the first time they have had to manage finances and plan for the longer term. Now is the time to establish good habits and attitudes that will last a lifetime. Here is my list of the top 10 things I advise young adults to do if they want to build a healthy and successful relationship with money:

    1. Write down your values and goals. You may draw some blanks at first, but these should be your guiding principles. Then work hard to make them happen.
    2. Earn all you can, save all you can and give what you can.
    3. Avoid credit cards until you have a full time job to pay off balances in full each month.
    4. Pay off student loans, credit cards and any other debt on which the interest is not tax deductible.
    5. Contribute to an RRSP early and often. You can’t beat the value of tax deferred compounding.
    6. If you’ve maxed out RRSPs, contribute to a TFSA and invest what you can. If you save and invest your money, you can’t spend it.
    7. If you need a car, buy a used one. It’s a depreciating asset that won’t help you build wealth.
    8. In everything you buy, buy quality, not brand.
    9. Don’t buy a house or condo until you can really afford it.
    10. Be ambitious and courageous; there is no such thing as failure; it’s just experience.