WealthDesign

Lots of parents want to give their kids what they never had.  But where do you draw the line?  I recently came across Mr Money Mustache’s website, and he makes a good point not just about lavishing your kids with all the gadgets, toys and technology available, but also in regards to paying for weddings, gifting house deposits and paying for university.  You could well choose to do all these things, but how can you do so while making sure they learn how to make good financial decisions, and also learn to appreciate the gifts, rather than learn to expect them?

As Mr M says, “It’s all noble and generous-sounding on the surface. As a parent, you want to give your kids all the advantages you didn’t have when growing up yourself. You earn much more than your parents did at this age, and so it is appropriate for a person of your economic standing to splash it out onto your offspring. Isn’t it?

The only thing is, in most cases you’re creating a double whammy of wrongness. Wrong because you’re spending more money than necessary, which means incurring more debt, working longer, and having less time to live your own life. And more importantly, you are probably programming your kids to expect handouts, and displacing their own healthy learning, effort, and growth with the leather-upholstered La-Z-Boy of your easy flowing cash.”

Makes you think really. 

Regan Thomas

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As a parent of young adults, I am aware of the pitfalls of sending them off to university, to the halls of residence or their first flat, without insurance.

If your son or daughter manages to leave the stove on and burns down their flat, the landlord’s insurer will happily replace the building for the owner and then chase the tenant for the cost.

All contents cover carries a public liability cover to protect this risk.  If your kids have charged off to university, or moved into a flat, or, if you are a tenant, double check that you have cover in place.  Accidents do happen! Be prepared.

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Often people are confused about what a financial planner really does. They think it’s all about investing money and only the wealthy should talk to us. They think it is about getting the latest shiny investment.  This is miles from the truth. We are here to help people achieve their goals in life. This means looking at their individual situation and making suggestions of how they can make changes to create a better future, for them and their families.

Sometimes I feel that as an adviser, independent advice seems to be marginalised and the institutions want to reduce the options for the public to find good advice. Their idea of quality advice is a teller that can only sell their products, and that advice is a commodity like a cheque account, a cookie-cutter process that treats every person the same.

I believe our generation has been hoodwinked by the banks. For example we often find people in their mid fifties with large mortgages and little savings for retirement. Yes, they may be in KiwiSaver but they don’t have time to save enough to really support themselves in retirement.  Financially these people need to make some hard decisions. They may need to down size, repay debt and start serious saving for retirement.   The strategy may even include planning to work until age 70. It will often include making sure there is a back up plan if one’s health declines. It is vital to set out a strategy and stick to it and this is where having a qualified experienced adviser is vital, someone who has your back and is here for you for the long haul.

It’s not about shiny investments or selling a product. It’s not about trying to get the last inch of performance out of your money, it is about working out what is right for you and helping you taking action, over your lifetime.

Bankers are great at banking.  Financial advisers are great at giving financial advice.  Horses for courses.

John Barber

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The amount paid out in claims by the personal insurance industry (life and income protection insurance) in the year ending December 2013 was $1,113,506,000.  This makes it the third successive year that the New Zealand industry has paid more than one billion dollars out in claims.

Peter Neilson, the chief executive of the Financial Services Council (FSC), said the industry was expanding in personal income protection insurance.  He said long-term illnesses were twice as likely to strike down employees than accidents, and were not covered by ACC.

Although many people thought they would be covered by the sickness benefit in the event of health issues affecting their employment, income testing meant about 60% of households would be ineligible.  “We end up with the majority of New Zealanders too rich for government help, but too poor to pay the mortgage.”

If you’d like to discuss your personal situation, give us a call.  We’re here to help.

Regan Thomas

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In my opinion education is one of the greatest gifts we can give our children. The ability to be strong, independent adults is a founding principle for their lives and having the necessary skills and education to be productive, is a vital part of this.

The fact is we now live in a world where nothing is free, including education, and unfortunately politicians and the press fail to emphasis this fact. We are following the USA system, where higher education is becoming increasingly expensive. With two daughters almost out of the university system, and seeing the level of student loans our university graduates are saddled with, I’m very aware that New Zealanders need to save for their kids’ education.

My advice to new parents today is to start a scholarship fund and put small amounts away over the next 18 years. Don’t touch it and you will have some peace of mind when you get to the expensive end of parenting!

John Barber

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