Money and finance are always one of the elephants in the room when it comes to family dynamics. Many family members are not comfortable talking about money. But if families could get comfortable with talking about money at the dinner table, and work together to promote the financial health of the family unit, family feuds, divorces and suicides would be reduced immensely.
Moreover, even those families who regularly experience money-related conflicts but are committed to sticking together, a more harmonious way could be achieved if everyone participates in their families’ financial planning exercise to achieve their financial goals.
Every family should have a fully comprehensive family finance plan to navigate the financial journey of the family unit. A good plan should include the following for the family:
- Dreams and Aspirations (Family Unit)
- Goals (Family Unit)
- Resources (Total Income of Family Members)
- Financial Responsibilities (Family Members)
It is important to involve the entire family — especially the children — at the appropriate level when it comes to the family financial planning and goal settings. This will not only benefit the breadwinners in the family, but it will also be beneficial to all parties since the children will be able to see firsthand just what is required to run a family successfully and comfortably.
As all parties work together to create a road map for the future direction the family should take, and then participate in the execution of the long term plan, they will gain good and practical experiences along the way to build a strong financial foundation. These are great lessons that will help the children to run their family successfully and comfortably later when they have their own.
Studies have shown that families who work together to create things like budgets for both long term and short term financial goals tend to have stronger family bonds. And such families are usually more capable of handling hiccups along the way. Why? Because when the entire family is aware of what the family unit is trying to achieve, each member will learn to adapt to the financial plans drawn or make necessary adjustments in spending, for instance, when unwanted surprises occur that impact the family’s financial goals. Having regular discussions and being clear on the financial situation of the family will also help to instill a sense of responsibility with each family member and thus causes them to alter their respective needs and indulgences when things are not going according to the financial plan agreed on.
When creating a financial plan for the family unit it is important for all family members to be present to discuss the following items:
- Monthly Expenses
- College/University Funds
- Car Purchases/Upgrades
- Large Household Expenses
- Emergency Funds
- Retirement Funds
- Entertainment Allowance
Getting all the family members to express their willingness to eliminate any unnecessary expenses and frivolous spending is also something that should be discussed when everyone is present. And periodic financial evaluation should be done as it’s a great opportunity to practice a better understanding of the family’s financial standing. Moreover, doing this will help the family make the necessary adjustments should there be a need for such changes.
There is a saying that says: “The family that prays together will stay together.” I will coin a spin of this. The family that plans its finances together will always stay together and achieve bigger financial goals.
Happy family financial planning!