Whether it’s a trinket, a special hand-made blanket, or a favorite tea set that has been handed down in the family through generations, everyone wants to have a legacy of sorts to leave his/her children with before passing on. Of course, money is still the biggest legacy, though not the most sentimental or important.
One can leave his or her children a bounty of wealth that’s able to last for generations with proper family wealth planning. Family wealth planning should be thought about by everyone as early as possible. It’s important at all stages throughout life.
In this post, you’ll learn about family wealth planning to help you understand the importance of the process more and some things to keep in mind as you start your family wealth strategic plan.
What’s Family Wealth Planning?
Building your family’s long-term financial wealth is important and its most essential part is family wealth planning.
The efficient strategy for family wealth transfer isn’t only focused on ways to move wealth from one generation to the next, but also on ways to prepare the next generation to keep and develop wealth themselves in the future.
Family wealth planning factors to consider include who will inherit which assets, how to manage family expenses such as college tuition and weddings, as well as how to manage estate taxes efficiently.
Simply saying, family wealth planning is guaranteeing that the financial goals and needs of your family are met now and in the future.
The Importance Of Starting Family Wealth Planning Now
It’s never too early for anyone to start making a strategy for family wealth planning regardless of their income level.
Initially, you begin planning by defining what financial success is for you and your family. Then, seek input from family members for you to know their financial aspirations and assess their ability to take an active role in the management of family finances and matters in the future.
Understanding all these things greatly supports your family wealth planning strategy and increases the chances of meeting financial goals and needs as well as passing wealth to the next generation.
Family Wealth Planning Best Practices
The most successful families engage in the process of family wealth planning by implementing the following best practices:
- Working With A Specialist
One of family wealth planning’s most essential parts is cooperation with a professional financial advisor.
The process of family wealth planning can be difficult, especially for those who are just starting to build their personal careers and delve into it. It needs several ideas and strategies that only a specialist can provide. That’s why most families work with third parties such as a financial advisor or a qualified accountant, especially when it comes to tax preparation.
To know the different professional services that you can benefit from when it comes to managing the wealth of your family, you may check out providers’ websites like www.daviekaplan.com.
- Adopting A Budget
Make a list containing both your income and expenditure. Apply wealth planning on the expense side.
You should ideally put at least ten percent of the total earnings you get into a savings account. If you couldn’t achieve the 10 percent, any amount would be better than none.
Note that you have to redo the process regularly to make sure that you’re putting as much money away as possible since your budget will surely change over the years.
Set up a separate account where the allotted money goes right away every time you get your pay. You can ask your bank’s help with this. Doing it this way ensures that you won’t miss saving ten percent or any amount out of your income and you won’t have the chance to bite the temptation to spend it for not so important things.
- Spending Money Wisely
Indulging once in a while is nice, but making it a habit is a bad thing. Even if there’s a great sale on shoes or any item you like, that doesn’t mean you have to purchase them right then and there. Instead, look for sale promos or deals on the things you really need like groceries. Stock up on non-perishable items such as paper towels and toothpaste. Make your latte at home, eat out less, and, most importantly, spend within your means.
- Investing Consistently
An investment account will gain compound interest for you over the years instead of earning little to no interest when you put your hard-earned money into a bank account. A good strategy is to save money using a savings account and move some of them to your investment account upon reaching a threshold amount, say, USD$1000. Of course, you can also use some of the money for establishing a small business, which will also contribute to the growth of your family’s wealth.
As you probably already know, you have quite a few investment vehicles to choose from. You can choose either mutual funds, bonds, stocks, or diversify your portfolio by putting money on each of these assets. The most important thing, of course, is to do your research and only commit to an investment you and your family members can be comfortable with.
With the cost of almost everything ever on the rise, it only makes sense to make sure the funds are ready so your family members, especially your children, won’t end up bearing the brunt of financial mismanagement in the future.
You shouldn’t only think about planning your family’s wealth; it’s something that you really have to do and start doing now.