By Jessica Maldonado
Do you have more patience for managing household finances than your spouse?
Do you make all of the financial decisions as the more financially savvy partner in the household?
Have you ever involved your children in a financial discussion?
Many of the important decisions we make regarding finances are made with family in mind, yet the duties for managing the finances are not always a family affair. For a financial plan to truly support an entire family’s dreams and goals, getting buy-in and tackling decisions as a family unit is essential. Here are some tips for developing a financially savvy family:
Making Financial Management a Partnership
The team mentality starts with both partners in a relationship. They are often the leaders of the financial decisions and can motivate other members of their family to participate and learn. When both adults agree to take an active role in the management of finances, it may protect one from being left in the dark and can also minimize arguments. In the 2012 study, Examining the Relationship Between Financial Issues and Divorce, fights about money were listed as the single biggest contributor to divorce.
- Discuss your values and goals – what are you working toward and how do your current spending and saving behaviors affect those goals?
- Set aside a specific time to go over the family budget
- Develop a plan for communicating spending habits to your spouse – perhaps you freely spend a certain amount of the budget, but discuss large purchases together before moving forward
- If someone feels unknowledgeable about certain topics, consider taking an adult enrichment course or reading a book together on those topics and discussing your development
Helping Children Feel Included
According to the 2013 Parents, Kids and Money Survey, only 19% of kids say their parents strongly encourage them to talk about money. However, not teaching and including children may leave them lacking important financial education and foundational values. The values they learn will be important as they begin making their own financial decisions.
- Let your children help set family goals (they can be small, like saving for a vacation) and then talk with them about how daily spending habits can help you work toward that goal or keep you from meeting the goal
- Use allowance or monetary gifts as opportunities to teach – help them divide the money into portions to donate, invest, save and spend
- More details for helping children feel included in money-related decisions can be found in “6 Lessons to Teach Your Children About Money”
Bringing in a Third Party
Families could benefit from working with an advisor, but it has to be the right advisor. Firms that focus on multi-generational planning (without the hefty price tag of a traditional family office) can help bridge this gap from one generation to the next. Relating to and understanding the nuances of each generation, and using the technology and communication strategies that each desires, as well as focusing on their immediate goals (these are different at different stages of life) are keys to success.
Segregating the management of finances could leave loved ones in a precarious position. It’s never too early (or too late) to start including your entire family in money discussions so you can help build a financially savvy family.
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