Financial planning: Securing a future for generations to come

Financial planning, and preparing for the future have never felt more critical than right now. Our experience with Covid-19, combined with general economic instability, has prompted many of us to reconsider how we plan to take care of ourselves and our families as we age, and after we pass.

The desire to secure one’s children a future with minimised financial challenges remains a universal value I observe in most moms, dads, and grandparents I consult with. Even those who are not parents have expressed an interest in contributing a portion of their wealth to organisations that uplift children in need and help make the world they’re set to inherit, just a little better.

As a generation hit by two major global crises in the last decade, today’s youth face particular challenges in shaping an autonomous life for themselves. With Youth Day fast approaching on 16 June, there’s no better time to consider how to empower and equip our youth with adequate financial resources, not just to take care of themselves but to ensure a healthier, more balanced society brimming with optimism and opportunity.

Pay attention to your estate plan

When it comes to financial planning and safeguarding the financial security of upcoming generations, an estate plan will ensure that your wealth is transferred to the right people in the right way after your death.

Having an effective plan for your money will ensure that even your great-great-grandchildren can benefit from the wealth you create – if that’s what you want. It can also ensure that your beneficiaries don’t end up with too much, resulting in the erosion of generational wealth. After all, you don’t have to give everything you own to your flesh and blood.

How you draw up your personal estate plan depends on your assets, personal values and desires. During this process, you can also integrate any charitable donations you might want to leave as part of your legacy, be it a children’s charity close to your heart or a community project striving to upskill and empower our youth.

This ‘passing of the baton’ involves creating binding legal documents to ensure your wishes are carried out. One of these includes drawing up a will. However, as crucial as this document is, it only forms part of the process. Estate planning consists of a range of legal documents, such as trusts, advance directives, various powers of attorney and other matters that can’t be covered in a will.

As an experienced wealth manager, there’s no one-size-fits-all approach when it comes to estate planning. It’s also not just about the paperwork but the process which involves far more than just pushing figures around on a spreadsheet. It can often be a whirlwind, so make sure you seek out professional guidance from an expert.

Teach them about financial planning

You can preserve and protect your wealth for generations to come by putting an effective estate plan in place. However, it’s also important to teach your children to develop a healthy relationship with money. If you don’t, somebody else will. And that’s not a risk you should want to take.

A recent study by the University of Cambridge found that money habits in children are formed by the time they’re as young as seven years old, proving that financial education is necessary for kids from a very young age. In families where wealth and finances are openly discussed and financial education is prioritised, successive generations can begin to inherit wealth, benefit from it, invest it, grow it, donate it, and leave it to their own children.

It’s also crucial to lead by example. Remember, those little eyes are watching you. They’ll eventually notice if you’re slapping down plastic every time you go out to dinner or the local shops. If you and your partner are constantly arguing about money, chances are, they’ll notice that too.

At the end of the day, access to high-quality and free financial education can help young South Africans feel more confident and empowered. Whether you’re a parent, grandparent, aunt, uncle, childminder, or teacher, I believe we all have a responsibility and ability to create teachable moments for the younger generations regarding better money management and financial planning.

Prepare for their education

Aside from purchasing a home, paying for a child’s education is likely to be one of the most expensive investments most parents or guardians will ever make in their lifetime. This report estimates that if you enrolled your child in grade R in 2017, you could expect to have paid between R1.3m and R3m by 2033 — the time it would have taken them to obtain a university degree.

As parents navigate uncertainty around job security and market movements, it’s likely that within the next 18 years, access to a formal education will sadly not be viable for children belonging to the average South African family. That said, it is entirely possible to ensure that your children get an education, and a decent one at that, provided you make financial provisions as early as you can.

Wherever you are right now in your timeline, my advice is simply to start now. It’s much better to be prepared early on for a range of scenarios rather than having to call one (or all) of your teenage children into the living room to tell them that getting a tertiary education is not on the cards.

If this all seems overwhelming, especially within the current economic climate, remember, you (and your spouse or partner) don’t have to figure this out all on your own. Fortunately, there is a whole pool of financial planning professionals who can step in to help you best provide for your family.

It is estimated that 75% of Africa’s population is under the age of 35, which means that many of the continent’s sectors depend on the welfare of our youth. When the youth spend, save, and invest their money, they have the potential to make a massive (and much-needed) economic impact.

To ensure a successful future, it’s imperative that we, in the financial sector and society in general, continue to nurture financial literacy amongst our youth and best prepare our own finances to aid their endeavours. South Africans have never had much in the way of financial education – at school, but even from parents. Let’s hope to change that for the next generations to come.

Need help with your family’s financial planning? Drop me a message here, and I’ll get back to you within 24 hours.

I’m Giles Maynard. I provide individual investment and wealth management services for private clients and companies. I have been trusted by clients, large and small to manage, protect, and preserve their wealth. How can I help you with yours?