Many of us would like to leave an inheritance for our children. We love them and want to leave a legacy that will give them a boost in a world that can be hard. But the reality is that not all of us will be able to do so due to a range of factors.
We’re now living longer lives and the cost of living is increasing, which means it’s getting harder to save any money. One positive in this is that less adults are expecting to leave an inheritance or receive one. In fact, only 28% of Americans polled believed that they would receive an inheritance. This actually looks fairly neat when you compare it to some Australian statistics. About 69% of Australians expect to be able to leave an inheritance to their children, but what about the rest of us?
You Can Leave An Inheritance That Is About More Than Money
Study after study has proven that happiness does not correlate to the amount of money we have to spend. We do have an understanding that people and relationships have a lot more to do with our happiness and comfort in the holistic sense. For example, when we get away from the ‘rat race’ and spend time together with loved ones on a holiday, we are released from our regular daily toil and struggles. It is often then that we’re reminded that money and the spending of it is not key to our well-being.
It’s often a challenge though when we return to work, because money is integral in how our society functions. Everything seems to have a price and the truth is that we cannot function in our society without money.
Psychologist Abraham Maslow, well-known for his hierarchy of needs theory, tells us that throughout our lives, humans are motivated to meet a series of needs, starting with the most basic and working into the more complex:
1. Physical: food, air, water
2. Safety: shelter, security, money
3. Love and Belonging: friends, family, relationships
4. Esteem: respect, recognition, reward
5. Self-Actualization: reaching one’s full potential
Leaving a Legacy Without Millions
So, although money cannot make us happy in and of itself, it can be used to help build the hierarchy of needs. We may not be able to leave an inheritance to our children in the monetary sense, but what are some ways in which we can help them out in this world? Here are some suggestions:
Look After Yourself
Living a healthy life now, means that you are more likely to be able to be a support later. There are many diseases you can avoid by living a lifestyle that considers the future and not just the here and now. Heart disease, type 2 diabetes and obesity are just some of the debilitating issues that massively impact your health and wealth. In turn, these can then also impact your children’s health and wealth if they end up being your caregivers. Their ability to work fulltime and the cost to their own families and health can be avoided if you care for yourself now. Mounting medical bills as you age will eat into your finances, so you may be able to leave an inheritance to your children if you remain as healthy as possible.
Be Wise With the Money You Have
Living within your means seems like something you might need to teach an adolescent with their first paycheck, but many Australians have not had financial wisdom modeled well and still struggle to do so. Sometimes it’s because there simply is not very much money, but often it’s because we have not learnt to budget and save well. Don’t be a burden on your children with your indulgent over-spending. It will be a gift to them if you don’t leave them with your debt to deal with, and increases your chances of being able to leave an inheritance for them.
Money is Not the Only Gift You Can Leave
Spending time with your family and passing on your wisdom through ‘osmosis’ is a valuable treasure many miss out on. Spending time together and sharing life together needs to be placed high on the scale of what’s important. Money can’t teach you how to be patient; change a washer; knit a scarf or bake biscuits for a neighbour who needs cheering up, but parents can help to do this here and now – with little children and with their bigger children. One woman recounts the story of how her dad helped to bolster her and her husband’s financial future with his labour. She says, “My dad was absolutely instrumental in renovating our (1909) house in a neighborhood that was expensive even in 1997 (thus worth a small fortune now) and renovating a rental that is now a cash-generator. I consider that more than enough inheritance! He didn’t leave much money, but he left the results of his labor and contributed a huge amount to our nest egg in the long run.”
Help Your Children Buy a Home
You don’t need money to do this. Tell them about your own story of buying or not buying a home! You can encourage them early on to think about buying a home. Help by doing some research about properties in their area and then giving them the information to make their own decisions.
If you do have a spare few hundred dollars then this could be to help pay for the legal costs of buying a home. Letting them know you love and support them in their decision making instills in them a treasure far more valuable than money.
Have Your Finances in Order
Make sure there’s not a mess when you die. Keep all your records in one place and let them know where it is!
Make a Will
Although you may not be able to leave an inheritance, a will is not just about money. It’s also about what to do with any of your personal items. So although you may not have much in your estate to divide up amongst your children, a will enables you to be specific about which items (even if they’re just of sentimental value) go to whom. Consider those special items, like pieces of jewellery, items of furniture, or crockery that’s been handed down through generations. It’s also a place where you can specify arrangements you’d like for your funeral and whether you’d like to be buried or cremated. Leaving clear instructions is a great gift to help your family when they will be struggling with the sadness of losing a parent.
Our estate lawyers would love to help answer any estate planning questions you may have. If you’re wanting to write a will, then they will have some good questions for you to think about in preparing a document that will help you and your family. Please contact us today – we offer a free, 10-minute phone consultation.