Wednesday, June 22, 2011

Make Financial Decisions a Family Activity

When it comes to chores many families are not so different from businesses, with members tending to “specialize” in something they enjoy or are good at. Certain chores will often become the domain of one family member or another, lessening the daily burden all around.  This may work well for tasks such as cooking, doing the laundry, mowing the lawn, etc.; but when it comes to finances this “specialization” can create long term problems.

While it may be convenient for one partner to pay bills every month, if both partners aren’t aware of the family budget and month-to-month financial status there can be a tremendous disconnect in spending habits, leading to resentment and often a slow decline into debt.  Even more frightening, disaster can strike quickly if the “accountant spouse” dies or becomes incapacitated. Quite often the surviving spouse has no idea what the family financial status is, or even where accounts or investments are located and how to access that money.

The best solution is for couples to talk about their finances often, or take turns being the family CFO. You may even want to consider involving the kids in the family financial planning once they’re old enough. Having a regular allowance or earning pocket money for chores not only teaches kids about money management, but also helps them understand when they have to wait to get that new video game, or when the family may have to cut back on certain luxuries.

Furthermore, children are natural problem solvers and activists, and including them in financial decisions such as which charities the family should support, or how to spend surplus cash can make them feel useful and important, as well as teaching them financial accountability.

Many of us look upon our finances with dread; but it doesn’t have to be that way.  Skill with money matters can bring us just as much pride and joy as skill with a paintbrush, tennis racquet, or any other skill that must be acquired with practice and hard work.  With a little education, and the involvement of the entire family, we can all become the masters of our own financial futures.