Monitoring cash flow for yourself is an essential task that is easily complicated. When this task becomes managing the finances of an entire family it is much more challenging. In many families, monitoring financial situations is left to one person. One of the most important parts of this role is communicating the financial situation to the rest of the family. It is a job too often neglected or poorly executed.
If you are the person managing the finances, you need to learn how to communicate with the other members of your family. Each person requires a different approach to deliver the message. If it is not handled appropriately, you will receive resistance. If it is handled well, members of your family will be encouraged to play their role in the financial well-being of the household.
Approaching the Talk
This is a real matter that needs attention, but you don’t want to enter this conversation like a business meeting or you will receive resistance from the start. At the same time, you need family members to take this seriously. They need to understand it is important.
This means, it is not a good have this talk while in the car on the way to soccer practice and it is not something you want to have clog up family time at the dinner table. Don’t make this conversation a subject you’re passing by. It is more important than that. But, don’t have your family time focused on finances. That will make the relationship with those family members feel more like a business conversation. Do not marginalize the importance of your relationships. Try to find a time between these two extremes.
This is your family. In order to make this conversation comfortable, put it in a context that is comfortable to them. Whether that is drinking tea on a weekend morning or in the afternoon after a walk, do it at a time of low outside stress. Talk to them in a comfortable setting and in a way they can understand.
If you never dealt with money, and someone said to you, “we don’t have the income to justify you eating out as much as you do,” you would be irritated and possibly confused. It would be worse if they told you that when you were on your way out to meet your friends for dinner. This seems obvious when we lay it out, but we still operate this way. When something arises we talk about. Instead, especially with a subject as sensitive as this, it will pay dividends to be strategic about it. This make look different depending on who you’re talking to.
Different members of your family need to be spoken to differently. They prioritize things differently from you and think about life in a different way as well. Do your best to speak to them in a way that is easier for them to understand.
Once you have the appropriate setting, you need to think about your language. Many people don’t love talking about finance. You can try to ease into the conversation by framing it in a positive light by saying something like, “can we sit down and do some planning? I’m making a budget and I want to make sure we have the resources to do everything we want.” Don’t set aside an hour of time and don’t make this about cutting back on spending. It is better to prioritize spending in the right places. This way, you’re framing the conversation around the positive idea of having more of what you want instead of wasting money in low priority places.
Work with comparisons where your spouse can see the value. If the two of you enjoy going out to eat, and this is a true priority but you’re spending $100 a month on subscriptions you don’t use, you can reframe that. “If we don’t spend there, we can go out to that Korean restaurant you love and still have money left over.” Trade something of low value for something of high value. This will be the best way of getting them on the same page as you.
This can work on a higher level too. “If we trade in your BMW for a Prius, we can lower car loan and insurance payments and start saving more for that trip to Japan we’ve been wanting to take.” Remember, this isn’t just taking money from one place to spend in another. You should be prioritizing to save for the future as well. But, the important thing is for your partner to understand the value of the changes so that they’ll be on board. Once you are framing things appropriately for the person you are talking to, they will be more receptive to the things you propose.
Getting children on board with a budget is a much harder task, and might be more important when considering the future well-being of yourself and your family. Your positive financial habits can improve the future of your family but they will mean nothing if there are not also positive habits instilled in the people that will grow up to take care of your family’s legacy.
The problem is, children don’t think in this frame of mind. They are much more concerned with what is enjoyable to them right now, in the moment. Delaying gratification is not interesting to children. In order to frame your children’s financial education in a positive light, you must figure out a way to connect those lessons to something more desirable. This could require a little more creativity but can also be a great way to spend time with your children while instilling quality values.
You can build the values and financial lessons into the games they play. For example, Monopoly has been one of the most popular board games for a long time. This is a game that lends itself to applying more real-life financial principles. Expand the game by allowing people to take out loans, use debts, and even invest. With these added abilities to leverage money in the platform of the game, you can use this time of play to teach your children higher level financial concepts.
If applying these concepts to your children is too high-level for them, you can still work to apply budgeting principles into their life of play. If they have a doll house or a toy with accessories, you can create a store to add to their playing. In this store can purchase the accessories they would like to add to their toys. By giving them a budget with play money, they will have to make decisions about how to prioritize their spending.
When the children get older and it is time to consider giving them an allowance, don’t make it flexible. They need to be responsible for that money. If they waste it, don’t let them come to the bank of mom and dad anytime they want for free loans. An allowance is not a terrible thing as long as it is applied appropriately. If you decide to give your child an allowance, make sure you’re not still buying things for them anytime they ask. They might be using the money you gave them wisely but they’re still learning that mom and dad are an endless source of money whenever there is a new desire.
Parents and Other Dependents
Hopefully it is not the case that other members of your family come to rely on you. But, it is not unheard of for parents and even brothers and sisters to become dependent upon another member of the family. If this happens to you, there must be ground rules set for the relationship.
Circumstances around these situations can vary dramatically. In any situation, proceed with caution and don’t give this new dependent too much autonomy with your money. If they have proven anything by becoming dependent on you, it is that they couldn’t manage their own finances well enough. Do not use the situation as a form of leverage over them. They will only grow to resent you through the interaction and it will add more strain to the relationship.
Demystify with Consistency
Talking to your family members about the financial well-being of the family is most comfortable when it is done often. The more regular you can make these conversation, the easier they will be to have. By having the first uncomfortable conversation, you can begin to progress towards making finances an open subject for regular conversation. Finance is one of the biggest stress creators in family life. If you can make this subject easier to manage, you will be putting your family in a more peaceful situation.