on November 21, 2023
You’ve probably heard something along the lines of “If you want to get along with others, don’t talk about politics or religion.” For most people, a third topic could be added to that list: finances. Many of us are uncomfortable talking about finances. We’re taught to keep any money-related business to ourselves, for fear of sounding crass. However, it is problematic when these views carry over to our families.
We should talk with our family members about financial matters, and we should do it often. If we fail to do so, that could lead to severe consequences. Let’s address 4 reasons to talk openly with your family about finances.
To Make Sure You’re Aligned
In a relationship, what if one person loves to spend, while the other loves to save? What if one is comfortable with risky investments, while the other likes to play it safe? What if someone is set on retiring in Florida, while the other wants to travel the country in an RV?
These financial philosophies and goals might not be irreconcilable, BUT it is absolutely essential to talk about these types of differences and figure out some common ground or reach a compromise. If spouses are not open about spending habits, savings plans, and goals with each other, that could lead to some unpleasant surprises down the road. Imagine being a risk-averse investor and finding out your significant other would like to sink 80% of your assets into a brand-new cryptocurrency. If you talk openly and honestly about financial outlooks and aspirations (preferably with a financial advisor), these types of surprises simply wouldn’t happen.
To Teach Your Kids
How will kids learn financial responsibility if we don’t talk with them about such things? Try letting them into the conversation so they can learn about things such as budget planning, investing, responsibly managing a credit card, paying off loans, and more. If you give them an allowance, teach them how to save part of it for a rainy day or an emergency (last-minute concert tickets or a new t-shirt could count as an emergency if you’re 16!)
It’s also a good idea to discuss the less “fun” aspects of finance, such as paying bills. My kids are old enough so that they are well-aware of which monthly bills we, as a family, have to pay (heat, electricity, trash pickup, all those subscription services…), and how much they cost. This awareness gives them some sense of what it means to be a responsible adult.
For Better Planning
When your family openly discusses finances, it becomes easier to plan for the future. This includes retirement planning (what does each person envision for their future?), estate planning (what are the wishes and goals for passing on assets?), and even short-term goals like vacations or major purchases. By having these conversations, you can align your financial strategies and make informed decisions together.
For example, if you’re planning a family vacation, discussing the budget and potential expenses can help ensure everyone is on the same page and no one feels left out. Similarly, if you’re considering a big-ticket purchase like a car or a home, talking about your financial situation and goals can help you make a well-informed decision that aligns with your long-term plans.
To Build Trust and Transparency
Talking about finances with your family promotes trust and transparency. It shows that you’re willing to be open and honest with each other, and that you value their input and involvement in financial decisions. Furthermore, talking about finances can help prevent misunderstandings and conflicts. When everyone is aware of the family’s financial situation, there are no secrets or hidden agendas. This reduces the chances of arguments or resentment caused by financial disagreements.
In addition, discussing money openly allows family members to support each other during challenging times. If someone is facing financial difficulties or needs assistance, having open conversations can lead to collaboration and finding solutions together.
By talking about finances with your family, you create an environment of trust, understanding, and shared responsibility. It sets a positive example for future generations and fosters a healthy financial mindset within the family. It’s time to get comfortable talking about finances; your financial future may depend on it.