How to get your children thinking about their financial future
The earlier you start saving, the more you will have in later life. It’s a phrase we’ve all heard at one time or another. Yet, while the overall message rings true, for many it’s easier said than done.
Lack of motivation to save for retirement is a common issue among young people. This is often due to the fact that this life stage can seem so far away. As well as this, complicated processes can put people off from regularly checking in on their pension pot and making an effort to improve it. Research by Hargreaves Lansdown revealed that 70% of young people find their pensions difficult to understand. Meanwhile, 24% of under 35s claim to have no pension savings at all.
And if this current economic climate entailing a widening cost-of-living crisis and soaring inflation has taught us anything, is that it’s vital for individuals to stay on top of their finances.
As such, with the new academic year around the corner and thousands of young adults taking charge of their personal finances for the first time, it’s important that we get young people thinking about their financial future.
Getting them involved
Certainly, it’s understandable why people who are decades away from retirement put their financial future to the back of their minds. Most savers grow their pension pot through workplace earnings, usually in the form of monthly contributions taken from their salary. Once seen on the payslip, it’s common for people to not give their pension a second thought.
This can be a slippery slope which can lead to financial uncertainty years down the line. However, educating young people on the value of saving at an early age is one way to overcome this issue.
It’s important that they are made aware from an early age of the true cost of retiring.
Discussions around money can sometimes feel like a taboo topic, perhaps because it can involve preparing for the worst. Nonetheless, these ‘talks around the dinner table’ are necessary to ensure that children understand the impact of saving for their future – particularly as the cost of retirement becomes more expensive.
Given the lack of financial education at schools and universities, parents must utilise available resources to equip children with the knowledge they’ll need to manage their money effectively and help them develop planning skills for later in life.
Never too early for advice
If people are ever in doubt about their savings and pension contributions, there is always the option to seek independent financial advice.
For example, My Pension Expert’s team of advisers will review an individual’s financial situation and make recommendations regarding their pension contributions to help them achieve their retirement goals. They will also assess how much can be contributed without negatively impacting their present financial situation.
At the end of the day, it always pays to plan ahead and contribute as much as possible into one’s pension pot, as early as possible. And, of course, savers should seek independent financial advice when in doubt. In doing so, young people can ensure they are on track to a financially secure future.