3 simple ways to start building a legacy for your grandkids
10 May 2019
If you’re lucky enough to have grandchildren, you know the joy they can bring. Cooking and gardening while your grandchildren ‘help’. Watching them reach the milestones your kids reached all those years ago, right in front of your eyes. And of course, spoiling them in a way that makes your kids roll their eyes.
It's very likely these moments are some you’ve dreamed of your whole life – a big feature of your retirement years. Many also never think they’d be one of those grandparents who’d give up all their spare time for free babysitting – we’re all different. But now, you can’t wait to spend every spare minute with them. Well, maybe a bit less so when their parents are late to pick them up and they’re having a meltdown and you just want your lovely empty nest back.
But the point stands – it’s natural to want to be able to support your grandkids as much as possible, for as long as possible.
Are you wondering how you can keep helping out as they grow up? Even at the point when you’re not around to lend a hand or shell out cash in person? Leaving a financial legacy is a way to give them a good opportunity to achieve what you want for them. While many Australians want this opportunity, when many people think ‘generous grandparents’ or ‘inheritance’, they think family dynasties, massive portfolios, or worse, ‘trust fund babies’. These perceptions get in the way of a lot of planning and action because leaving a meaningful financial gift is achievable for most people - it just takes a bit of planning and preparation.
Tip #1 – Set meaningful goals
Most people set clear, realistic and well-researched financial goals for themselves – so what’s stopping you from doing the same and setting saving and investment sub-targets for your grandkids? Ask yourself questions like:
- Will they be able to get a more valuable education with financial help?
- Do they need help with university or post-graduate, or will they take a different career path?
- Do they have special healthcare needs that aren’t covered by insurance?
- Would helping them with a head start on a house deposit, still allow them to afford a mortgage?
- Would they even accept your help at all?
Tip #2 – Think about your time frame
Once you have a number in mind, you need to consider the time it will take you to get there. Your time frame will be determined by their age now, and the age/s at which they might need help – or when you’re willing to give them their gift. It might also depend on your age, how long until you retire, and other financial goals on your horizon. You might have five years to save and invest, or you might have 18 years.
Remember, your timeframe could be extended if you use a structure like a trust which ensures that your grandchildren can’t access the money until they’re ready to handle it and make smart decisions.
Tip #3 – Start with something
If you’re feeling overwhelmed by the goals you’ve set yourself, and everything you want to give you your grandkids, start small and build up. You could investigate product categories that are generally lower risk and have a lower entry point, such as a high interest savings account.