From buying a home and raising a family, to keeping your finances in check as you navigate the tricky path to retirement, as a parent your knowledge of keeping finances in check is certainly well up there with the best.
While there have no doubt been some downfalls and mistakes along the way, for the most part you’ve likely got your head around how to keep your accounts balanced and prepare for any unexpected outgoings. That’s why, according to Rob Lockhart, a financial educator at Westpac, it’s important to pass on information to your kids and grandkids, even if it goes against previous beliefs around money conversations.
Speaking to Starts at 60, Lockhart explained in his parent’s time, and most likely with your own parents, there was a lot of privacy around finances. This is something which has carried over into the next generation as people still hold back when it comes to discussions about their money matters for fear they’ll seem greedy or as if they are struggling to get by.
However, the finance pro said all of those thoughts need to be put in the past to ensure bad habits don’t get passed on down through the family chain, and open discussions on money matters are essential. He said: “For example, when we’re at the supermarket, we could discuss why we’re comparing the prices between things, because we want to understand the true value of what these things are. We have to involve our children when we’re budgeting for things – for example, saving up our money for our next holiday or car, or even saving money to buy Christmas presents.”
Your adult children may want to splurge on fancy cars and designer clothing but if it means they won’t be able to afford necessities like paying the bills or buying food, then it’s probably not the smartest idea. Budgeting is a tip your parents were no doubt fairly strict on, especially having grown up in the Great Depression era when frugality was key. Though finances aren’t quite as stretched as they once were, sticking to a budget is great way for the kids to keep track of where their money is going and how much they have left to spend at their leisure, without having to call you to help them meet their rent payments.
This is something apparently a lot of Aussies are already doing, according to the Australian Financial Attitudes and Behaviour Tracker report. The data compiled by the Australian Securities and Investments Commission found 77 per cent of Australians create a budget to better manage their money.
Starts at 60 readers have shared their own advice, with many prioritising spending as a top area of focus. As you will know all too well, when that weekly, fortnightly or even monthly pay lands in the account, paying off debts is the first step to take, like mortgage or rent, bills and food. Then instead of heading to the shops, saving the rest will help grow the bank balance.
It seems simple and something that your mum and dad probably drilled into you as a kid, as they questioned where that pocket money was heading, but it works! If the kids are insistent on making a big purchase, get them to think about it for a few days at least to make sure it’s something they really want. Impulse buys can be damaging and comparing prices could help them save funds and walk away with the best deal.
As a kid, you probably remember popping a coin or two in the piggy bank each week, with the money saving technique then passed down to your children. This behaviour should be mirrored throughout your life, with the funds deposited into a bank account instead of your trusty money box.
Taking out a set amount of your pay packet and contributing it to a seperate savings account for future endeavours may seem like a waste of time, but it all adds up and could help your children to purchase the home of their dreams. But that isn’t the only way to save funds.
It’s probably a bit of a dying habit but browsing supermarket catalogues for the best deals is a great way to save a few dollars at the checkout. One Starts at 60 reader recently said: “Purchasing an item at 20 per cent [off], even in the supermarket, is like getting 20 per cent interest in the bank. Saving the cents will save the dollar.”
Alternatively, looking out for discounts could save the big bucks, especially when it comes to necessities such as electricity and gas. Paying bills on time will not only help to keep the credit record clean but could save money, with some energy providers offering discounts for those who don’t pay late.
It’s really never too early to start thinking about retirement and you will know all to well the benefit of contributing extra cash to your super. But unfortunately, according to the Australian Financial Attitudes and Behaviour Tracker report, few Aussies actually think that far ahead and many haven’t set out a plan for their future.
The data found less than half Australians have a three-to-five year financial plan, with around one in four having a long-term financial plan. Starts at 60 readers have suggested putting even $10-$20 extra a week into the super account with the balance adding up over a lifetime.
On top of this, fellow Baby Boomers said encouraging the kids to seek advice from professionals is a good place to start, explaining doing this early is wise.