5 important financial topics to speak to your adult children about this Talk Money Week


young father and his daughter laugh with his older motherTalk Money Week is right around the corner. Running from 8 to 12 November, it acts as an incentive to put taboos aside and openly discuss your financial situation with those close to you.

It’s no secret that talking about your finances can be difficult. In fact, a survey from the Money and Pensions Service found that 55% of Brits don’t feel comfortable discussing their financial situation, despite 48% admitting that they regularly worry about money.

While you’re likely to have plenty of financial sense, your children may not have the knowledge that you do, even if they’re well into their adult life. In this case, it’s never too late to pass your knowledge on to help them manage their money better.

Read on for five crucial topics you may want to raise with your children this Talk Money Week.

1. Keeping an emergency fund

Keeping an emergency fund is one of the best ways to ensure financial stability. An emergency fund is a separate pool of savings that is designed to be used for unexpected, essential payments.

Experts recommend that an emergency fund contains three to six months’ worth of essential expenses. This ensures your child has funds they can access in the event of an extended loss of income or a surprise expenditure.

A boiler breakdown or a damaged roof could happen at any time, and by keeping an emergency fund prepared for this situation, your child has the peace of mind that they have savings available to cover any unplanned costs.

2. Growing their wealth through investing

Since interest rates are currently at record lows, it might make sense for your child to invest their money for long-term growth. To do this effectively, it might be worth discussing with them their financial goals.

Financial experts recommend leaving investments for a minimum of five years, which gives the money ample opportunity to grow. For goals many years down the line, such as a mortgage or even retirement, this could be the most effective method to help your child’s savings keep their value when inflation is taken into account.

3. The importance of financial protection

Financial protection could prove vital for anyone, no matter their age or health.

Financial protection can come in many forms, from life insurance to income protection and critical illness cover. It can be difficult to know which form of financial protection could be right for your child and their family, so they should consider speaking to a financial planner before making any decisions.

A Lasting Power of Attorney may also be an important consideration should someone else live with your child or rely on their income to survive.

In a previous article, we also discussed the mental health benefits of financial protection for those who have it. Financial protection can help to give a greater sense of confidence and peace of mind, since your children needn’t worry about their finances in the event of the unexpected.

4. Building a pension

Many younger people consider their pension to be a low priority, and as such your child may think they needn’t worry about paying into it. They may pay the basic amount each month through auto-enrolment, or they may have stopped their contributions altogether through the pandemic.

In fact, FTAdviser recently published research stating that, for those aged 18 to 24, their pensions were their lowest financial priority, and nearly a fifth of them had stopped making contributions.

Your child needs to know the importance of their pension. Their pension is how they will continue to earn an income long after they’ve stopped working, so it needs to be big enough to support a comfortable lifestyle for many years.

Plus, if your child plans on leaving any inheritance to their children or family, they will need to have enough saved up to leave behind and cover any later-life costs.

Of course, thanks to compound returns, the earlier your child starts to build up their pension, and the more they can put in at a young age, the more opportunity it has to grow.

5. The benefits of financial advice

Lastly, the benefits of financial advice cannot be understated. A financial planner will be there to look after your child and their savings, helping them make sound financial decisions.

They will also be there to help your child achieve their financial goals by helping them create plans and strategies surrounding their finances.

Plus, just like financial protection, a planner can help boost their mental health. They can help to give your child confidence and reassurance when it comes to their finances, and help your child see how their money can get them to where they need to be.

A planner can also help to give your child a greater sense of control, and they aren’t afraid to take the steps necessary to grow your child’s wealth.

Get in touch

If you want to find out how a financial planner could benefit your children, please email info@investmentsense.co.uk or call 0115 933 8433.

Please note

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). 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.