Family must manage their money together to avoid financial distress.
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Bayport Blog

Avoid financial distress and make finances a family affair

Published: May 3, 2021
Categories: Debt Relief
Tags: Financial Stress

Avoid financial distress and make finances a family affair

Who gets a voice in a family’s finances? The answer can cause a lot of financial stress or remove it.

In most households and families, money is a very difficult topic. Some families never talk about it, while others only fight about it. A study done in 2014 found that people find it easier to talk about death than personal budgets and finances! Other studies suggest that we would rather discuss mental health and infertility with strangers, than talk about finances with our families. It is time to break this bad old habit. What you learn about money as a child, tends to shape how you deal with it as an adult. When you show your children healthy money behaviours and choices, backed up by constructive money discussions, you set them up for a future of financial success. This doesn’t mean you can ensure your children will be rich; it means you can teach them to make good financial decisions so that they don’t end up in trouble, regardless of how big their salaries are one day.

Why should we talk about money?

The biggest reasons are that money impacts all the members of your household, and that financial planning and money management are skills every person needs. Money, and particularly debt stress, is also one of the biggest sources of conflict in households. Talking about it can, therefore, contribute hugely to the quality of your family life.

When should we talk about money?

Start today. It seldom works if you try to have a money discussion in an emergency. For that reason, it is best to start talking about money when things are calm and your household is not under pressure. If you have never discussed money before, it could be a good plan to link the first talk to a specific upcoming event or change in your circumstances. For example, you can ask your family for a discussion about budgeting for the upcoming holidays, or the impact of you getting a new job where your basic salary is fairly small but the commission you can earn is very high. Before you start giving your children a regular allowance, is another opportunity. At the end of the first discussion, get your family members to agree on regular money meetings in the future. You want money to become something your family talks about regularly and easily, instead of an event when there’s an emergency.

What should we talk about?

Start with small topics, such as planning for a holiday or a birthday party or next week’s grocery shopping and meal plan. Ask your children what they think about money, and how they see your family’s financial situation. Invite them to ask questions and share their experiences. Talk about your household’s financial goals and dreams. For instance, a new family car, or tertiary education for all the children. Discuss financial concepts, such as saving, debt, responsible lending, and whether or not one should lend money to friends or family members. Financial literacy is in very short supply all over the world and should start at home. When you feel the time is right, introduce the family/household budget. You really want every member of your household to understand how much money comes into the household purse and how it is spent. The idea is not to create a sense of there’s not enough money but to help everyone understand that how you spend money is a choice. A budget calculator like this one can be very helpful:

How do we talk about money?

This is probably the most important question to answer. If the meeting turns into a fight or a blaming session, nobody will want to do it again. Here are some tips on how to approach your discussion: Find a good balance between formal and informal. You don’t want to make the discussion so formal that it intimidates your partner and children, but it should also not be so informal that people can be on their phones instead of participating. Draw up a fun little agenda, set aside a specific time, and gather in a place you won’t be interrupted. Keep the tone light and make an effort to get everybody to participate. Even if you know more about finances than anybody else in your family, don’t behave like a teacher. The goal is to give every person a voice. Listen. Really listen. Understand what other people are saying, never make fun of someone else and be gentle when you correct a wrong perception. Money is a very personal matter, so we have to be kind to each other. If the discussion gets heated, take a break – but always come back and close it out properly. Don’t let aggression derail your discussion. It can happen easily because money is an emotional topic. If you are concerned that your family members won’t be able to control their tempers, especially if you have a serious topic to discuss, ask a friend to lead the meeting. Write down all the decisions you take during your discussion and put it up where everyone can see it if they want to. This ensures that you do what you agreed to do and that everybody leaves the meeting with the same picture. A family money meeting can sound very intimidating, heavy, and unpleasant. But it doesn’t have to be. It is an opportunity to learn from each other, develop financial skills and grow closer together as a household and a family.

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