We chat to Jason Garner, Management Consultant at Acsis, about ways to provide for additional expenses.
Part two of an article on the problem of unemployed youth increasingly relying on parents article. You can read the first part here.
What sort of measurers can parents put in place now in terms of savings?
The first thing parents need to be aware of when dealing with financial affairs and the burden that young adults can place on their finances is to be aware of this burden sooner than later. The sooner parents have identified that they may face a financial issue later on in life when their children grow up, they can start putting a plan in place to deal with this potential threat to their savings.
Parents must consider that their children may not be able to find employment after school and as a result they may need to financially provide for their children. This may include supporting them for an additional period or assisting them in getting a tertiary education. Alternatively, parents can provide their children with start-up capital for their own business.
Whatever parents decide to do, it is vital to have measures in place to take care of these potential future eventualities as soon as possible.
Can you please offer five ways to better plan financially for such situations?
When it comes to financial planning and ensuring that what we are planning for is likely to happen, it is important to look at a few scenarios, rather than being confident that everything will go according to plan and face disappointment when it does not and risk financial security.
We need to look at a few likely scenarios when we plan for our lives and particularity when we plan for our lives with children. We all have a reasonable idea of what to expect financially when we have children but our financial plans should make provision for an ever-changing environment. Some of the things we can do to help deal with changing circumstances and sequences of events are:
1. Realise that no plan is full proof
This means that we can plan for as many events as possible, but the reality is that no financial plan is set in stone. It is important to increase your savings as much as you can. That way if things don’t work out completely as anticipated, you have a safety net.
2. Always plan for the worst and hope for the best
Many of us fall in to the “optimist trap” when it comes to financial planning. We should always plan realistically and make provision for life’s curve ball rather than be blindsided and deal with damage control. This way, if we plan for our children to be dependent on us for a few extra years rather than expecting them to be free from us financially when they leave school, we are able to provide it without compromising our lifestyle and financial plan.
3. Plan for a variety of scenarios
We need to take cognisance of the fact that life can take us on more than one pathway to our future. This means that although we have a preferable view of what we want our life to look like and how we see ourselves best getting to that point, we should also consider some of the potential alternatives we may face other than our intended path. We should consider each of these different scenarios potentially happening in our future and then activate our "back-up plan" that will best deal with the challenges and threats that each scenario poses.
4. Action your plan
Most financial plans fall short in the implementation phase of the plan. A plan is only as successful as the implementation thereof and we will constantly fail in achieving our desired outcomes if we fail to consistently implement our plan.
5. Review your plan
The power of a good financial plan is in its regular review. A plan is not a static document but rather a living financial plan that requires small changes on a regular basis to keep track of the ever-changing environment and personal circumstances. If you are struggling to get to grips with your financial situation, engage with a certified financial planner in order to plan to get where you want to be. A good financial planner will help coach you through the mine field of the financial world and provide you with the guidance needed to make the best decisions for your financial future and lifestyle objectives.