How you can help loved ones achieve financial security

While you may have achieved financial security, some of your loved ones may still be at a point in their lives where they’re struggling. With stagnant wage growth, rising living costs and fewer generous Final Salary pensions on offer, many adults are finding it challenging to secure their financial future.

It’s natural to want to provide support to your loved ones when they’re struggling. However, it can be difficult to know what the best course of action is to have a lasting, positive impact. Those affected by financial insecurity often believe that it’s impossible their situation will improve and aren’t sure where to turn. Research from Aegon found:

  • 31% admit their finances control their lives
  • 27% feel unprepared for a financial emergency
  • 36% said they wouldn’t be able to handle an unexpected expense
  • 41% are concerned that the money they have now won’t last
  • 30% feel unable to enjoy life as a result of financial insecurity

Kate Smith, Head of Pensions at Aegon, commented: “Our research paints a worrying picture of the UK’s financial health and individual’s ability to manage their money. Good financial management sits hand in hand with positive financial wellbeing and it is concerning to see so many people are unable to live life to its fullest as a result of how they’re managing their money.”

While every situation is unique and financial worries are complex, there are often ways you can help, from offering financial support to advice.

Be on hand to offer support and advice

It can be difficult to offer advice to loved ones, particularly if money is a sensitive subject. But being on hand to offer guidance when they ask can be beneficial.

Not only does it let them know you’re there for them, but it gives you an opportunity to share tips you’ve picked up. When offering advice, listening to what they say and trying to understand their situation is important. Appearing overly critical of their choices could mean they’re reluctant to seek your advice in the future.

Help them create a financial plan

Often a lack of confidence holds people back from taking steps that could improve their financial security; this is where a plan can help. Starting with the immediate, such as a weekly budget, you can build from here to understand their future financial security, for example, how they’ll create an income in retirement or pay off the mortgage.

You can’t make a loved one choose the path you would, but working with them to set out their finances now and in the future can help them understand your perspective.

Emphasise the importance of balancing short and long term

When money is tight, it’s often the present that’s focused on. However, this can come at the price of future financial security. Opting out of a pension scheme to ease the pressure of household bills now could mean years of struggling once retired. Keeping this in mind is important when weighing up financial decisions.

Looking at the long-term gains of planning for the future can encourage loved ones to follow advice too. Pensions are a great example of this as they’ll usually benefit from tax relief and employer contributions in the short term while generating investment returns in the long term.

Provide financial support

Of course, providing financial support may be an option too. Whether regular financial support would help cover essential areas or a lump sum could give loved ones the deposit to step on to the property ladder, it could boost their security significantly.

If this is something you’re considering, be sure to understand how it’ll affect your personal finances and long-term security too. If you’re worried about how taking money out of your income or other assets will have an impact, our cashflow services can give you the confidence to move forward. By showing the impact delivering financial support will have on your wealth in the short, medium and long term, you’ll be in a better position to make a decision that suits everyone.

Suggest where financial advice can benefit

When struggling financially, professional advice is often dismissed as too expensive and of little value. However, financial planning can give greater confidence in the steps being taken. Money has a huge impact on overall wellbeing and understanding that you’re on the right track for a secure future can improve health and outlook on life.

Suggesting to your loved ones where financial advice can be useful, for example, when purchasing a house or considering where to invest, can give them guidance at key points in their life.