Over the last couple of weeks, my conversations with clients have changed.
When we started to realise how serious the effects of coronavirus might be, we began to review clients’ financial plans, checking if they could be sustained and agreeing if changes needed to be made.
I’m pleased to say that our clients’ plans have proven to be sustainable, and, as a result, we haven’t had to make many changes.
A couple of weeks ago, clients started to tell me about sons, daughters and grandchildren who had been furloughed, or who ran businesses which now had zero revenue, and, usually, ongoing expenditure.
Almost everyone is concerned about whether the government support schemes will deliver money into their accounts, and whether the support will arrive in time.
And there are plenty of people who won’t qualify for government support.
So, many of my conversations have started to include an additional subject – can I help my family, and what’s the best way to do it?
Most of the time, the children and grandchildren have no idea that their parents or grandparents are worried about them; but worrying about our children is what we parents do.
If you have a financial plan, you will have a fund for emergencies (if you don’t, you need a new financial planner!) – usually between three and six months’ worth of your regular expenditure.
It’s there for emergencies, so it might be a good place to start.
But it’s there for your emergencies, rather than those of your family. And it’s unlikely to be sufficient to provide the support, which all of your children and grandchildren need.
It would be unconventional to have an emergency fund large enough to cover emergencies for everyone in your family! If you use your emergency fund to help your children, you will probably need to replenish it.
It’s easy to go into a tailspin of worry, and we often find that, after a sleepless night, parents are asking us these questions:
-Can I afford to help out?
-From where do I get the money?
-Should I offer money to other children, who seem to be ok?
-Should I make a gift or a loan?
-Should my child’s in-laws’ be helping too?
-What documentation do I need?
-Do I need to tell HMRC?
-Will my children get taxed on money I give them?
Rather than answering each question, one by one, there’s one thing everyone should do if they are worried about whether they can help their family – speak to us.
The first question we will ask, after your night of worry, is “have you asked your son or daughter if they need financial help?” The answer is usually “no, not yet”.
According to a recent survey, we’d rather talk to family or friends about our sexuality, infertility or mental health than money, and over 50% of people fear that they will be judged if they open up about money.
It’s rare for parents to know the financial status of their children.
In my experience, many of us who are worrying about our children’s finances are doing so for no good reason at all. So, the first thing to do is to ask your children if they need help.
If they don’t, then we can speak to us, and we can breathe a sigh of relief together. If they do, then we can start to work out how you might help and to answer some of those questions which are troubling you.
In the next post, I’ll set out some of the things you should do if you decide to help your children financially.
