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Strengthening Financial Ties as Families to Build Intergenerational Wealth

03 August 2023 Hugo Malherbe, Executive Product Development at PPS Investments

As we celebrate National Savings Month, my call to action is for families to start assigning value to saving and investing collectively and intergenerationally. Families often find themselves responsible for supporting not just their children, but their parents and/or parents-in-law financially.

In this article, we delve into the factors that families should consider when creating plans to build save and build wealth collectively. We also explore the importance of having a multi-generational financial plan, as well as the common scenario where families are often required to provide financial assistance. Furthermore, we will examine PPS Investments' innovative solution, known as Family Network, which offers a mutually beneficial incentive for families to invest together.

Budgeting
The first step is creating safe spaces to talk about money within families, particularly about budgeting. Ramit Sethi, who hosts the hit Netflix reality show, How to Get Rich was recently on a podcast and highlighted how parents have a huge impact on the way their children think about money, as they become adults. He shared how a large majority of is work involved helping his clients to reframe their narratives around money, given that many of them grew up in households where talking about finances was taboo.

I do believe that if families create safe spaces to have meaningful conversations about money children will be encouraged to consider saving for their preferred futures, by starting earlier on in life. Creating a family budget and savings plan is a fundamental step towards achieving financial stability. By collectively allocating resources and tracking expenses and involving children from an early age, families can ensure that everyone's needs are met. This helps to give children a realistic picture of a household’s financial circumstances. Setting financial goals, such as saving for retirement, education, or emergencies, enables families to navigate financial challenges and achieve long-term prosperity.

The burden on the young for the increasing demand for frail care among older generations
Recent statistics reveal that a growing number of South Africans are actively involved in looking after their parents and/or parents-in-law financially. With rising living costs, healthcare expenses, the eminence of dread diseases like cancer and longer life expectancies have resulted in the need for intergenerational financial support.

A colleague recently shared a story about her father, who was severely ill for months and ultimately succumbed to heart failure. He had received very good medical treatment throughout his period of ailing health, due to having sufficient savings in his medical aid. Her mother is still very healthy, but my co-worker worried that if her mother was to be bed-ridden for a prolonged period like her father, the funds in her medical aid would be insufficient and she and her sister would have to carry the responsibility of looking after her. They decided to set up a “frail care fund” for her mom, so that if any unforeseen circumstances arise for her to need frail care, they could contribute towards her wellbeing.

Drawing up a multi-generational financial plan
A multi-generational financial plan is not a common principle that families explore but is a strategic approach to managing finances. This plan considers the financial needs and goals of each generation, including parents, children, and even grandchildren. Imagine your next family gathering included a conversation around how you can create wealth together, share best practices around establishing investment strategies, and regularly reviewing and adjusting the plan you co-created, to adapt to changing circumstances.

Intergenerational Investing with PPS Investments
PPS Investments recognizes the value of intergenerational investing, which is why they developed the Family Network as a value-added benefit. By investing as a family, individuals can reduce administration fees and contribute to compound savings over time. By pooling investments amounts and investing collectively, families can unlock the potential to leverage a lower fee benefit, which can have a compounding benefit over the long term.

With PPS Investment's Family Network, families can further enhance their financial advantages and strengthen their net worth. Let us embrace the power of intergenerational investing and start building a legacy of long-term wealth and financial security for our families. All family members who want to be a part of a network, need to have investment products with PPS Investments. As the adage goes, “your network is your net worth,” we would like to say, “let your Family Network serve as an avenue, to increase your net worth.”

To learn more about the Family Network and its comprehensive range of features, visit our Playzone. Alternatively, learn more about Family Network on our website, by visiting our website. Join us in empowering families to build a culture of wealth intergenerationally with the hope of creating a legacy that lasts for generations to come and protecting the financial wellbeing of the older generation.

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