What Your Children Need for a Financially Secure and Happy Future
Knowing you’ve done everything you can to set your children up for a financially happy and secure future can bring you peace as a parent.
For many, this means setting aside money and structuring your estate in a way that will benefit your children and/or grandchildren in the future. These are crucial steps. However, to fully set them up for success there are a few more elements you’ll want to consider.
In this post, we’re looking at some recent research from Empower where they asked whether money makes Americans happy and if so, what is it exactly about money that causes this happiness.
From this research, they identified some key themes that contributed to financial stability, freedom, and happiness. We’ll go through those in this post and talk more about how you can set your children and grandchildren up for future success.
4 Factors for Financial Happiness
The Empower research found that to achieve financial happiness people need more than just a good income. A resounding number of respondents highlighted that the following elements have a direct correlation to their financial wellbeing:
- Financial independence
- Having a safety net (resilience)
- The ability to give (generosity)
- Having a solid financial plan
Now, let’s take a deeper look at why these factors are so important and how you can help cultivate them in your children and/or grandchildren.
1. Financial Independence
87% of the respondents in the study claimed that they would know when they reached financial happiness because they would have financial independence. The idea of not having to rely on anyone else to help them with money played a big role in what it meant to be financially secure and content.
The research also found that it was important that they could afford everyday comforts, with 62% of the Millennials surveyed saying they were willing to buy a daily coffee because it brings them joy.
2. Having a Safety Net (Resilience)
In the research people also stated the importance of having enough money to be able to cover any unexpected costs. 87% of the people stated that having the funds to pay for unforeseen expenses without being negatively affected contributed to their financial happiness.
This makes sense as not having an emergency fund when needed can cause immense stress for individuals and families.
3. The Ability To Give (Generosity)
The research also showed that it’s not enough to just have money to take care of yourself. 84% of people stated that the ability to financially provide for loved ones brought, or would bring them, financial happiness.
This could be helping aging relatives, a growing family, or both if you’re part of the sandwich generation. Either way, it brings people comfort knowing they can provide for loved ones should they need to.
4. Having a Solid Financial Plan
According to the Empower research, 7 out of 10 respondents believed that having a solid financial plan would bring them happiness. This also echoed the findings that those who already had a solid financial plan in place were three times as likely to report financial happiness and freedom. The research also showed that overall retirement has been pushed back by three years, however for those lacking a detailed financial plan or any plan at all, it has been pushed back by five years.
How To Help Your Children And/or Grandchildren Achieve Financial Happiness
Now that you know the key factors that go into financial happiness, the next question is, how can you make sure that your children or grandchildren go on to achieve these qualities? We’ve pulled together a few ways in which you can help:
- Teach financial literacy. Teaching the younger generation about money from an early age, in age-appropriate ways, is crucial for helping establish a healthy relationship with money later in life. This could be done by teaching about saving, delayed gratification, and compound interest. It can also be through things like budgeting and summer work.
- Talk about money. This goes hand in hand with teaching financial literacy. When you talk openly about money, sharing your learning experiences, both good and bad, you share crucial knowledge that can help your children and/or grandchildren learn. It also provides a space for them to talk about any doubts or challenges they are having as they gain more experience with money.
- Help them create a solid financial plan. When they understand more about how the world of money works, and are at a suitable age, help them to create a solid financial plan for their future. This is likely to change and adapt as time passes, but as we’ve seen from both the research and our decades of experience helping multigenerational families, having a plan and a direction can set them up for financial happiness. It also empowers them to take charge of their future and their finances.
- Get advice. Today, many different kinds of platforms and technology can be used to help your children and/or grandchildren develop the skills and abilities to start understanding the concept of finances and help them manage their own in the early stages. As they become more financially independent, or as you plan to communicate your legacy and plans to them, having a trusted advisor your children and/or grandchildren feel comfortable with is critical.
In fact, the Empower research found that the majority of respondents associated getting good money advice directly with financial happiness. So, helping your children and grandchildren find trusted sources of information and advice early on is important. Our EWP team is always available to answer your questions, recommend the appropriate platforms and technology, and support you and your family's unique needs.
Final Thoughts
Setting the next generations up for financial success is about so much more than just putting money and assets aside.
The research we have seen shows that financial independence, resilience, the ability to help loved ones, and a solid financial plan are fundamental to future financial happiness and security. This means teaching them the skills they’ll need for the future, now.
To learn more about how you can guide your children and/or grandchildren towards a prosperous and happy financial future get in touch with your Entrust Wealth Partners advisor today or reach out to us at (860) 838-3730 for more advice.
