5 things to consider when discussing finances with your family

Talking finances can be taboo for a lot of people. Many think it’s intrusive or invasive to have these conversations. With that being said, how much time is used to discuss money within our own families? 

As a child, money really doesn’t hold the same value as it does in our adulthood. Children only think about money and finances in general when it’s dealing with something they want or think they need – often tangible items like clothes, shoes or that shiny new toy. Maybe we had the same ideals during our adolescence until life showed us differently. No matter how we were raised or how finances specifically were (or were not) talked about, it’s important we leverage what we know now and create an environment where the entire family can benefit from regardless of age.

Have very open and candid conversations

While we all understand that kids should in fact – be kids, that doesn’t necessarily mean we should withhold information, with the assumption that it can’t be kid friendly. For example, if there are mistakes you’d like to prevent your child from making (or at least generate awareness), use real life experiences to help paint the picture for them. What are some patterns or behaviors you fell into in your younger years? What would you tell your younger self if you had the ability to? Use these questions to generate a list of things to talk about as the situation allows. They may not be able to grasp things fully, but they will have the background knowledge you provided to help generate better decision-making skills as it relates to finances.

Discuss the importance of saving early and often

As adults, many of us understand why it’s so important to save. Emergencies happen, unexpected occurrences are a part of life and having multiple nest eggs to fall back on create a sense of financial peace. Open a savings account for each child and have discussions around why it’s important to save. Many banks have checking and savings accounts tailored for minors. Allow them to get comfortable and not fearful about money and what it can do.

Embrace and encourage teachable moments

Since children don’t have the responsibility of paying bills, they’re typically oblivious to the consequences (good or bad) of things. If your little ones have a hard time remembering to turn off lights when they’re not in use or turn the water off when brushing their teeth – bring it to their attention. Explain to them that utility bills are not free and how every little bit helps. Children may be young today, but they will grow into adults. The goal is to create awareness and mindfulness over time.

Encourage critical thinking skills

If you are a parent, guardian or responsible for any children’s wellbeing encourage critical thinking skills. Let’s say they would like to buy something. The first step would be to ask them questions, “How much is this item? Why do you want this item? What can this item do for you? Do you want to save up so you can purchase it?” Allow them to think these answers through; this helps them to process the value of obtaining the product. Next is the actual saving process. This physically helps them to understand the “waiting period” – the time you identify an item and the actual time period it takes to acquire the funds to purchase. During this process they may identify something else they’d like or completely scrap the product altogether. During this waiting period, you can also ask questions such as – “Will you have money left over after this item is bought? Has anything changed about what you’d like to buy?” These critical skills are important and will help shape their ability to be sure in their decisions or allow them the freedom to change their mind. 

Discuss finances with your parents

Be sure to discuss finances with your aging parents. Do they have a retirement plan? Where would they like to live during their latter years? Will you be responsible for their well-being? The sooner these questions are answered, the better. You want to make sure all parties are aware of what actions need to take place prior to – the details lie in preparation.

What are the next money conversations that you plan to explore with your family?

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About

The Finance Bar is a personal finance suite helping women and couples achieve financial wellness through financial therapy, education, and an innovative learning hub on wheels. Creator Marsha Barnes is Certified in Financial Therapy, Financial Social Work, and serves as an Official FICO Brand Ambassador, and was named GOBankingRates’ Best Money Expert in the Net-Worth Category.

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