What parents and grandparents can do to help secure their offsprings financial future
July 23, 2020
Australian parents are concerned for their kid’s financial futures. There’s fear that their kids won’t be financially secure and will be unable to afford a property or a decent education. And now, grandparents are concerned for them as well.
In the face of growing economic concern and uncertainty, parents and grandparents alike are now feeling that the next generation will not have enough financial support for those significant life events.
Start saving earlier
A report from Generation Life, “Saving for the Next Generation”* , revealed that 52% of parents and grandparents worried about their kids financially. However, despite this worry, more than half those surveyed (53%) are not currently saving to support their kids. While 15% of grandparents are saving towards their grandkid’s financial future, two thirds of parents and grandparents wished they had started saving earlier.
Catherine van der Veen of Generation Life said that now more than ever “the next generation are going to need help to pay for their education and to get into a house. Parents and grandparents are stepping in to help, with one third of parents saving towards a first property for their children”.
Chose the right investment options for your time-frame
Research highlights that the increasing cost of living, and the pressures that come with it, mean that parents are choosing to save for their kid’s school and university costs. But the research also highlights that they are not looking at the most effective strategy to achieve this. 59% of parents and 48% of grandparents are saving for their kid’s financial futures using cash and term deposits.
However, today’s record low interest rates don’t just affect home loans. They also mean low returns on cash investments. A cash investment is probably one of the safest options, due to the lack of negative returns, but also provides very little growth. Ten years ago, high interest savings accounts were everywhere. But today you would be hard-pressed to find any savings account with an interest rate higher than 2% (and these are generally made up of a base rate of 0.5% plus bonus interest paid when specific terms are met).
Aussies who are using cash as their only form of saving may find that it is no longer an effective method to reach their long-term financial goals. Those wishing to build wealth through investment may need to consider moving at least some of their money away from this option.
Learn to make better financial decisions
Lucy Foster of Generation Life believes there are better ways to make our money work harder. Whilst most Australians are looking for smarter and better ways to make the most of their money, “our research indicates that one third of Australian’s have never heard of investment bonds”.
If you are concerned about your kid or grandkid’s future financial position, do what you can to boost your financial literacy, to better understand your options. Better still you can help your kids to boost their financial education, so they too can make more informed financial choices. You could also talk to your financial adviser about the options that are available to you, and what may best suit your needs and circumstances.
Need help?
Want some help with your savings plans? TelstraSuper Financial Planning Advisers can provide advice on a range of topics to help you secure your family’s financial future. You can speak to a financial adviser from TelstraSuper Financial Planning by calling 1300 033 166 or fill in our online contact form.
Any general advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice on this website, you should consider whether it is appropriate to your individual circumstances. Before making any investment decision, you should obtain and read the relevant product disclosure statement which is available on the Website or by calling 1300 033 166 between 8.30 am and 5.30 pm (AEST) Monday to Friday.