Create a financial whizz-kid

Understanding the finer details of establishing a sound financial future goes a long way towards educating your children on the various financial options available.

Finances and budgeting can easily become a topic to avoid for individuals. Facing the reality of your finances might not be the most fun pastime, but you should educate children to face reality head-on.

According to Old Mutual financial advisor Arnold Farmer, starting early to save for the education of your children can go a long way towards creating a secure future for them.

"Individuals do not necessarily only have to save for university; you have about five to six years to save for a good school before children have to go to school," Farmer said.



Starting the right savings plan all depends on what you can afford.

Here are various ways to start a habit of saving and to foster a healthy relationship with money:



1. Educate yourself first on the financial options available: Understanding the various pension funds and policies available places you in a better position to start educating your child. At various stages of their lives, children and young adults need to be informed about what is out there.

2. Allowances: Creating an environment where children can save their allowances every month will help teach them how to deal with money. Start small by ensuring they have a piggy bank available. Or pay them for doing small chores around the house.

3. Establish a relationship with a financial advisor: Finding the right financial advisor can help families create a sound future for themselves and for their children. According to Farmer, the right financial advisor can create various financial and saving options to help parents and children in the long run.



Guidance

Understanding policies and life insurance happens when one establishes a healthy interest in financial issues. The internet can be a great place to start researching, but having a financial advisor around to provide personal tips can go a long way. Farmer explained that the sooner one starts with a policy, life insurance and funeral cover, the more you will save at the end of the day.

"Life insurance is not to enrich others," he explained. Farmer added that the younger you are, the lower the premiums will be.

One has to declare any health problems at a very early stage to ensure payouts happen on time. Waiting as you get older can increase your risk of developing health issues. Young adults are advised to head over to a financial service provider to obtain the necessary health checks.

The must-have financial options to have in place are a funeral plan, life insurance and a pension fund. "People realise too late the importance of having funeral and life cover in place. They wait until something bad happens before taking action," Farmer said.