As a successful sports professional, you understand better than anyone that working as a team is the only way to achieve the outcome you desire. No matter how well you play, it is the effort, strategy, and determination of the entire team that earns you the win.

Whether you are still at the height of your career, moving on to work in a new industry, or completely retired, your sporting knowledge can come in handy in other areas of your life.

Indeed, they say that no man is an island, and this statement could not be more pertinent than when applied to your finances.

Off the field, your team might look a little different. Your spouse, children, parents, siblings, friends, and your financial planner, all make up a strong network that supports you through thick and thin.

Yet despite how close you might be with your family, you may still feel that discussing your financial decisions with them is unnecessary. Nevertheless, the cost of living crisis, as well as your unique position as a high-earning sports professional, presents a key opportunity for you to open up the conversation at home.

Read on to find out three powerful reasons to discuss your financial planning and decision-making with your family.

1. Reviewing your finances as a family can help during the cost of living crisis

The cost of living crisis has presented difficult circumstances for earners across the wealth spectrum. Indeed, even as a high earner, you might be feeling the effects of inflation and high interest.

For example, after the Bank of England (BoE) raised the base rate to 2.25% in September 2022 (its seventh consecutive rise) your mortgage repayments could be increasing.

What is more, research from LV= reports 19 million people in the UK struggled financially in the three months to July 2022. Of these, 4 million needed financial help from friends and family, double the number from the previous quarter.

As a high earner, your family could ask you for financial support during this time. On your end, it is important to review how much you can afford to help, and how your own wealth circumstances are changing too.

By opening up the conversation with your spouse, parents, siblings, and adult children if you have them, you can determine if and where help is needed, and form a strategy as a team.

You could even arrange to speak with your financial planner all together, so we can review your wider family circumstances and provide expert advice when it is needed most.

2. Discussing your finances with loved ones can help you pay less tax

It is not just during the current cost of living crisis that family discussions can help your finances.

Indeed, being open about your financial circumstances with those you love most can be constructive for many other reasons, especially when it comes to how much tax you might pay.

Here are two circumstances in which discussing your finances with family could mitigate your tax liability.

Selling assets that are subject to Capital Gains Tax

Capital Gains Tax (CGT) is applied to profits you earn on certain assets when you sell them. These include:

  • Possessions you own worth more than £6,000, apart from your car
  • Additional properties other than your main residence
  • Your main home if you have rented it out, or it is very large
  • Shares that are not held in an ISA or PEP
  • Business assets.

As of the 2022/23 tax year, each individual has a CGT allowance of £12,300. This means you may not pay CGT on profits less than this amount within that tax year.

By working with your family (including your spouse and adult children) to sell off family assets, you can strategically “multiply” your CGT allowance and lessen your tax bill in the process.

For example, if you and your spouse each held investments in your own names then, in the 2022/23 tax year, your combined CGT allowance would be £24,600 when selling these investments. This could significantly reduce your tax liability.

Using ISAs to save towards your goals

Saving for your future using ISAs is a fantastic way to reduce the tax you might pay, as any interest or investment returns you earn from these accounts are subject to neither Income Tax nor CGT.

However, the amount you can pay into your ISAs each year is limited to the ISA allowance, currently standing at £20,000 in the 2022/23 tax year. So, working with your spouse or partner to maximise your ISA savings together could benefit your entire family down the line.

For example, if you and your spouse or partner both pay into your own ISAs in the 2022/23 tax year, you would effectively “double” your collective contribution limit from £20,000 to £40,000. This strategy can help grow your family wealth tax-efficiently in the years to come.

3. Teaching children how to manage their finances can help them avoid costly mistakes

As the old adage goes: give a man a fish, you feed him for a day; teach a man to fish, you feed him for life. This ancient saying could teach you something about sharing your financial experiences with your children.

Indeed, somewhat worryingly, research published by MoneyAge revealed that 9 in 10 young people between the ages of 11 and 18 have “limited knowledge” when it comes to financial matters.

As a parent, you want to use your wealth to provide opportunities for the next generation. Yet offering them money or assets to achieve their dreams without teaching them valuable financial lessons can lead your children to make costly errors.

By removing conversational barriers, and instead being an approachable figure they can trust, you could be putting those you love most in a great position for the future.

Plus, if your children are set to benefit from significant wealth over the course of their lives, for example by receiving funds as part of a trust, it may be constructive to help them become financially savvy. Teaching them how to handle large amounts of money can instil them with confidence and help them make informed decisions in the years to come.

Get in touch

For help working as a team when it comes to your finances, or any other wealth matters, contact us today.

Email or call 01625 529 499 today to find out what we can do for you.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.