Where there’s a will could be a way to change your outlook
People hate to bank on Mum and Dad’s death — or at least admit they do.
If you knew though . . . if you had absolute certainty, that one day your parents would die and leave you some money, why wouldn’t it be reasonable to think about the financial implications?
Not worrying about your parents’ finances is a great place to be in, if that’s you.
For a lot of us though, we don’t have that luxury and one day, perhaps our parents’ inability to take care of their own financial future will be our problem to deal with. It’s one thing to try to teach children about money — but to be sandwiched in between two generations who are muppets with money — that’s a heavy burden.
For some of us, Mum and Dad could be a liability — for some however, parents are a financial asset.
If you have an inheritance coming down the pipeline at some stage, let me pose a few questions that are absolutely taboo . . .
Why wouldn’t you account for a financial windfall, especially a decent-sized one that could potentially wipe away all the mortgage debt you could ever accrue? How would you approach the purchase of your next family home, the renovations you’re planning, or the purchase of a holiday home? How would that affect your attitude towards taking financial risk today?
It feels dirty even posing those questions, especially in a country that isn’t great at talking openly about money, but I think we should talk about this. Knowing that there’s a 100 per cent possibility that you’re getting a third of an estate which is currently valued at $2m and mostly deployed in property, shouldn’t you factor that into the financial decisions you’re making today?
I’d like to talk specifically to those of you who were born between 1965 and 1980.
Much of the financial advice you hear comes from older people. That’s right — it comes from people who found a strategy, often in hindsight, that may have worked well in their world. There’s wisdom in what they say, but it’s often mixed up with realities quickly fading away with time.
For example: Work hard at your job, be loyal to your employer and your bank, pay down debt as fast as you can, then save the rest to fund your retirement — which will be “just fine” providing you live a stripped-down, decaffeinated version of your current life. Sound appealing to you?
Being “rich enough”, isn’t good enough for me. No, I’m not a greedy “capitalist pig” — far from it — I’m just aware of demographics and how it’s not in favour of my kind.
We need to aim higher than what the older generation achieved — we need to assume that the future will not be more of the same, or even an
Why wouldn’t you account for a financial windfall, especially a decent-sized one.
evolution of it. So our thinking about how to prepare for the future must change, and be influenced by new thinking.
Learning about Bitcoin, investing in “real” assets like precious metals, and investing in property — one of those things I can guarantee you’re comfortable with, but the other two are for “those fringy” people. Unless you’re knee-deep in learning about things that the older generation are dismissive of, to a certain extent, you’re doomed to experience the fruits of living in a world designed by dinosaurs.
So on to your parents and the fact that one day they will die, and hopefully leave you with something . . . If they purchased a home, say back in the late 60s or 70s when you were born, let’s assume they paid $40,000 back then. If it’s in a major city, it could be worth close to $2m today — hopefully it’s debt-free and they have some outside capital to fund the remainder of their years. With any luck they can stay there for another 10-15 years and perhaps the property doubles in value again, like it has since they bought it. Without obsessing over it, wouldn’t it be reasonable to factor this in to your financial plan?
The reality is, some do, and they make no progress personally themselves. A sadder truth however is that some do not. Instead, they’re living under a heavier burden than they need to, overly obsessed with their inability to repay debt and feeling guilty of enjoying time with their kids overseas.
Being a gen X’er, I’m conscious that new wealth in the new world will likely come from new thinking — taking a windfall into account is just one of those things. I personally don’t have any inheritance in the pipeline but if I did, I would most certainly adjust my attitude towards taking financial risk accordingly.
The fruits of your parents’ wealth could transform your family line, so why wait until you receive it to start living and start growing a larger base of wealth? Why not plan for a retirement full of enjoyment, giving, travel, grandchildren, and a higher quality of life than you currently have? Darcy Ungaro