Everyone wants to leave their children a legacy of sorts when they pass on. It’s something to be remembered by, whether it’s a favorite tea set, a special hand-made blanket or a trinket that has been handed down from generations. Of course, the biggest legacy (although not the most important or sentimental) is money. With proper family wealth planning, you can leave your children a bounty of wealth that can last for generations. Maybe your kids can finally open their own restaurant and name it after you.
In fact, family wealth planning is important at all stages throughout your life, and should be thought about as early as possible; when you have a young family, and certainly before retirement. Here are a few things to keep in mind when starting your family wealth strategic plan…
Adopt a Budget
Make a list of your income and expenses. On the expense side, put ‘wealth planning’. Ideally, you should put at least 10 percent of your earnings into a savings account, but any amount is better than none. Your budget will change over the years, so redo this process on a regular basis so you’re putting as much money as possible away. When you get your pay, make sure this allotted money goes into a separate account right away (your bank can help you set this up). That way, you won’t even miss it, and you won’t be tempted to spend it.
Spend Your Money Wisely
Do you really need that set of golf clubs? Great sale on shoes? That doesn’t mean you need them. Of course, it’s nice to indulge once in a while, but don’t make it a habit. Look for sales on mandatory items, like groceries, and stock up then (this is a great idea for non-perishable items like toothpaste, paper towels, etc.). Eat out less, make your latte at home and spend within your means.
Investing your money means that you make your money work for you. Instead of putting your hard-earned cash into a bank account that earns little or no interest, an investment account will gain you compound interest over the years. A good strategy is to put money away into a savings account, and then when you reach a threshold amount – say, $1000, move it to your investment account.
There are several investment vehicles to choose from, including stocks, bonds, mutual funds and more. Do some research on what is available and choose an investment vehicle that you’re most comfortable with. It’s best if you can learn to diversify your investments; that way, when the market goes through a correction (and it will), your money will be safe.
Hire a Professional in Family Wealth Planning
If the thought of managing your investments makes you feel overwhelmed, don’t worry. Hiring a professional that you trust can help you gain an even better return on your money, and can help you get a better night’s sleep, knowing your money is working as hard as it can for you. You’re really going to have to do some research on this step, though. Ask family and friends for recommendations, and meet with several professionals from different companies before you commit.
With funeral costs ever on the rise, it makes sense to have these funds ready so your children don’t have to bear the brunt of the costs. Pre-planning your funeral may be something to think about, so your final wishes get carried out with ease.