This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.
Risk management is essential to maintaining wealth. Creating wealth is one challenge; protecting it over time requires a different set of skills and strategies. And while some risks can be anticipated, the greatest threats are often the unexpected events—the surprises we never see coming.
For high-net-worth individuals in the mining and resources sectors, an unforeseen health issue or a major life event can disrupt everything, taking you out of the picture when it comes to decision-making and oversight.
When the unknowable strikes, are your spouse and children prepared to step in and manage the wealth you’ve built?
Insurance and estate planning are, of course, fundamental elements of risk management, but there’s another risk to your legacy: the heavy burden placed on family members if they’re unprepared to shoulder the responsibilities of wealth management.
Fortunately, you can take proactive steps to educate and involve your family, providing them with the financial understanding and experience needed to carry your legacy forward confidently.
Involve Your Spouse: Building Familiarity and Confidence
One of the simplest but most effective steps is to involve your spouse in your financial world. While many wealth creators handle the primary decision-making themselves, increasing your spouse’s familiarity with financial matters can greatly reduce the burden if they ever need to step in.
Encourage regular participation in meetings with your financial advisors, accountants, and lawyers. Through these discussions, your spouse can gradually learn about your financial structures, the strategies you have in place, and your long-term goals. This process goes beyond numbers; it provides them with insight into the thinking behind your decisions, preparing them to act as stewards of the family’s wealth if the need arises.
Educating your spouse about financial and investment behaviour is equally important. Understanding market fluctuations, financial risks, and the psychology of investment decisions will help them feel more comfortable with the responsibility. In time, they can gain confidence in their own ability to participate in, or even make, key decisions that align with your vision for the family’s future.
Educate and Engage Your Children: Preparing the Next Generation
Preparing your children to manage wealth takes patience, practical steps, and a long-term commitment to their financial education. While school might not teach them about personal finance, you can create a foundation that builds both knowledge and a sense of responsibility.
Younger Children: Building Financial Foundations Through Fun and Practice
Financial education should start young, but it doesn’t have to be overly complex. Begin by teaching your children the fundamentals of money, savings, and budgeting in ways that balance learning with enjoyment. As they learn through this process, they’ll develop basic skills, gaining insights into decisions without the stress of real-world consequences.
As they mature, consider allowing them to make small investment decisions with actual funds. For example, if you have a family trust, you can retain legal control while setting aside a portion of funds for them to have input on investment decisions. You might even match their personal savings as an incentive, enabling them to experience both the rewards and challenges of investing. This hands-on experience teaches them invaluable lessons, fostering a sense of ownership and responsibility as they grow.
Older Children: Empowering Responsible Investment Choices
For older children, providing a gift or allowing them to make investment decisions with a larger sum—anywhere from $20,000 to $1 million—can be a powerful learning experience. The exact amount is less important than the responsibility of managing it. This could mean giving them full control over their own investment decisions or guiding them to use these funds toward long-term objectives, such as retirement planning or superannuation contributions.
Providing adult children with funds to manage in a structured way prepares them to make thoughtful investment choices and teaches them to prioritise financial growth over time. Funds placed into superannuation accounts, for instance, can yield tax advantages and build wealth more effectively than other structures, furthering the family’s financial legacy.
Financial education is a journey, and mistakes are part of the learning process. It’s essential to appreciate that building financial acumen takes time. Our experience has shown that financial responsibility cannot be taught in a short period; true understanding requires years, especially as family members balance their own life commitments and priorities.
Confidence, Continuity, and Legacy: The Outcomes of Preparation
Preparing your family to manage wealth isn’t just about preserving assets; it’s about ensuring that your values, vision, and legacy endure through generations. By involving your spouse in financial matters and gradually equipping your children with the skills to manage wealth, you build a support system that’s ready to protect and continue the family’s achievements, even if the unexpected happens.
For personalised guidance on preparing your family to manage wealth and secure your legacy, contact us for a discovery call. We can help tailor a family wealth strategy that aligns with your goals and prepares your loved ones for a confident financial future.
Contact Brett Cribb at +61 (0) 7 3007 2080 or email contact@resourcesunearthed.com.au for a personalised consultation.
Resources Unearthed is a solutions hub that connects senior executives, established professionals, and business owners in mining and resources with proven specialist advisers.
