When we think of relationships, we are reminded of how we interact with other people. Our journey through life offers up both healthy and less healthy personal relationships. The same can be said for our relationship with money.
For many of us our early experiences with money can trigger a range of emotions from feelings of anxiety through to joy and contentment, which can shape our values and relationship with money.
Based on our values, money can make us feel secure, as we provide for ourselves and those we care for. But money can also have negative connotations; like making us socially competitive or leave us with feelings of envy.
So why is having a good relationship with money important?
Over the years there have been numerous reports showing that money is a leading cause of stress in many of our lives. So, it seems logical to us at Woodgate Financial Planning to help our clients with their financial wellness, as a part of their overall wellbeing.
Many of our clients contemplate life events, such as retirement, business succession planning and the transfer of their wealth to the next generation. As they consider a transfer of wealth, they typically question their loved one’s relationships with money and wonder what will become of their hard-earned wealth once it is passed on.
Take, for instance, our clients Alex and Belinda. They have debated amongst themselves whether they should discuss their wealth with their children and what they plan to do with it. Like many of our clients, Alex and Belinda are considering the affect this may have on their children. Could knowledge of future wealth limit their ambition if they knew there was a large inheritance due to them?
Or would their children be as good stewards of this money as Alex and Belinda have been throughout their lives, and help them to realise opportunities may not otherwise have been possible?
At Woodgate, we work with our clients to establish an Estate Plan. This details not just the practical elements of planning, such as ensuring that our clients have up to date Wills and Lasting Powers of Attorney (LPAs) for example, but also encourages them to have open conversations with their loved ones about their plans for their wealth. We might suggest writing an open letter to their family, explaining their personal views and values, how the money was accumulated, and how they would ideally like their loved ones to manage it in the future.
It is often surprising for our clients and their families how effective these conversations can be. Often families come closer together as they begin to understand commonalities in views and values, as well as acceptance that it can’t be assumed that their loved one’s money values are the same as theirs.
Many of our client’s comment that once prompted to open conversations with their family they are pleasantly surprised how well they went. New insights are gained as experiences are shared, especially related to money growing up. The next generation feel better more informed, and able to understand why their parents took various approaches to spending and building wealth, as well as how their legacy should continue.
So our advice is to take time to think about your relationship with money and how it was formed. Maybe think about having a conversation with your loved ones about your plans for the monies you are passing on to them, and why you have taken the decisions you have.
If this makes you feel uncomfortable, consider consulting with a financial planner to develop a strategy to develop a Plan for the most appropriate financial outcome for you and your family. From our experience, having a third party present to guide the conversation can be hugely valuable, and helps keep things on track.
At Woodgate, and with support from our associated business relationship with Moss Solicitors, we have been able to help many of our clients have successful and well-meaning conversations like these. Feel free to get in touch to learn more about how we could help you and your family have the same conversation. In doing so, you will not only improve your own personal relationship with money, but you will also improve you and your loved one’s financial health and maybe have a better quality of life.
Director of Woodgate Financial Planning