Welcome to episode number 4 with your host, Dr. Jennifer Hunter. Today’s topic is the importance of family communication about money.
Most couples can talk about anything—except money that is! Whatever the reason, many couples avoid talking about finances until life presents them with a job loss, medical emergency or unexpected bill. To have a strong, healthy marriage, positive communication is essential. If a couple can communicate openly about money, chances are they can communicate about anything. We also know that most of what our kiddos learn about finances, they learn at home. Therefore, it’s important to have open communication with our children about the financial decisions that we are making at home.
Tips to keep in mind as a couple
Lay everything out on the table. How much income does each spouse earn? What are your monthly bills? What do you pay for rent or mortgage, groceries, gas, insurance and utilities? When is each bill due? Whose name is on each bill?
Discuss pooling your resources. Do you have separate or joint banking accounts? As a couple, discuss the pros and cons of each and decide what is the best option for you and your family.
Finally, how will you work fun money for entertainment, clothing, dining and dates into your budget? Do you have individual spending allotments? While it’s important to work towards financial unity, it is also important to allow yourselves a reasonable amount of money to each spend at your discretion.
Fun money is meant to be that—fun—so couples should have a conversation about what the expectations are for their fun money and be very realistic about how much is available in the budget for the fun money line item expense.
Talking about money in your relationship can sometimes seem intimidating, especially at first. But remember that your relationship is ultimately a partnership and in order to maximize your potential as a couple and reap the greater rewards you have to work together.
Include the children in age-appropriate discussions
This is a great first step to help children learn the value of money and how to spend it wisely. Providing the kiddos with opportunities to practice hands on financial experiences will benefit them when they’re young adults.
Spend time talking with your children about finances. Provide them with budgeting opportunities (e.g. for family vacations as discussed in previous episodes), discuss how they might budget their allowance to save towards a big purchase, and talk about expectations when doing things like back to school shopping, so that they are well prepared and informed about making money decisions.
Set realistic expectations
Wants and needs of children can influence the family budget and spending choices. Children and especially teenagers can at times be unrealistic about a family’s financial situation. They either over- or under-estimate income and expenses, so it’s important that parents help paint a realistic picture of the family’s finances for their children.
Be honest about your money situation. If you cannot afford something, let the children know that. However, use your discretion about how much you disclose so that you do not stress them out about the family’s financial situation.
Be realistic with children about expectations, and discuss with them the difference between needs and wants and help them understand some months there may be more money available for the wants than other months.
Understand that conflict may arise during these conversations, and it’s not something that you should avoid or ignore, but instead focus on how to make the conversations more comfortable and the conflict more manageable. State your wants, needs, and thoughts and allow other family members to do the same.
Teach children how to budget
If your children have an allowance, consider allowing them to open a checking and savings account. Teach them to make deposits and how to balance their checkbook, as well as encouraging them to make regular deposits into their savings.
Show your children how to budget their allowance but do not expect them to be perfect. If they blow it, let them learn from their mistakes. Eventually their budgeting skills will improve, and much better to learn now as a kiddo than as an adult. It will not hurt them to learn the hard way when it comes to their wants.
Setting goals with clear objectives gives our children something to work towards, and rewards are always more meaningful when they are earned and not just given.
Challenge the kids to be smart with their money. Help them out when you can by encouraging their efforts and offering advice along the way. Family communication about money can help make our children much better money managers in the future.
Stay tuned for the next episode where we will discuss yard sales, and being a bargain hunter and a savvy seller.
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This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Military Family Readiness Policy, U.S. Department of Defense under Award Number 2019-48770-30366.