Financial planning helps create a roadmap for the future. It shapes both short-term and long-term financial goals and guides on what needs to happen to realize those goals and dreams. Ideally, family financial planning should begin when someone decides that getting married and having children is part of their future.
Family financial planning also helps plan for your family’s future and aids in financial decision-making. The goal is to ensure that resources are used efficiently to achieve family objectives while upholding family values. Planning also ensures that wealth is created and passed down to future generations. Within the family, different people will have different needs and goals. With financial planning, these diverse goals can be harmonized or aligned to ensure that every family member is happy and gets the best out of their input. The whole family is protected through financial planning as the goals are set collectively, and everybody works towards a common goal. Collective planning helps avoid poor individual financial decisions that can affect the whole family, as there are checks and balances. Regularly reviewing the family’s financial situation can also help in identifying the kind of adjustments required to take advantage of emerging opportunities that can benefit the whole family. When it comes to money matters, a family needs to read from the same script to avoid conflicts and mistrust. That is possible through family financial planning. By involving both spouses and children in the planning process, a family can develop a shared vision and work together toward a better financial future. Protecting family wealth is a key benefit of financial planning. The family can adopt several strategies such as creating trusts, taking insurance, or writing a will to ensure family resources are safe in case of the death or disability of the family head or main decision maker. This aspect of planning ensures that future family generations will have financial resources to support themselves, particularly when parents die leaving behind young, dependent children. Also, parents should not put off retirement planning, particularly if they want to avoid being a burden on their children. A good place to start is by evaluating the resources a couple already has. From there, they can develop investment strategies that help grow the family wealth base. Investment strategies for the family may include savings in pension funds or trusts, taking tax reduction steps, and minimizing wealth transfer associated costs, for example through making gifts to family members as they incur less taxation. Some of these family investment strategies are best implemented with the help of a financial advisor or retirement planner. Family wealth planning can be an opportunity help to educate younger family members on wealth management. When future generations are involved in the planning process, they learn about family values and why it’s important to secure the family's future through prudent financial planning. Also, future generations can be equipped with critical skills they might need later to manage family wealth effectively and to make informed decisions that boost family resources.
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AuthorGary Begnaud - EVP of Janney Montgomery Scott Office in New Jersey Archives
June 2024
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