Tips to make better money choices as a family
More often than not, financial decisions for the family are made strictly by the parents, but what would happen if you did it differently?
To help your entire family get better at making good money choices, having everyone involved in the process is key.
Finance isn’t a topic that comes naturally and unfortunately, it’s something that is lacking in traditional education, so unless you get your kids involved in making smart decisions at home, they’re missing out on a skillset that can greatly benefit them for the rest of their lives.
Plus, it takes the pressure off the parents to solely make all the decisions and turns financial decisions into more of a democratic process (to a degree of course!).
So here’s how to start making better financial choices as a family.
- Get rid of the enforcer and make money choices a family effort
In most households, there is one person who handles the finances, and that person makes the decisions (or with the other parent) about what the family needs to budget, what the family spends, and what they are saving for. But by making it a more collaborative process where the children have a say not only teaches them about making smart choices, but it also takes the pressure off that sole person.
Now I’m not saying children should be the ones to decide between saving for a house or spending that money on a 5-star trip to Disneyland, but having an open discussion around why the parents make certain major financial decisions helps kids feel like they are involved. Then, for decisions that the parents are happy with both outcomes, let your children vote or have a say.
- Start having regular family meetings
It might sound simple, but gathering the troops (anyone five years plus), sitting around a table, and having open discussions about money every month or two to talk about the family goals is the most important step to take.
At your first meeting, decide on a family goal (whether it be going on a holiday, getting a pet, moving to a private school, etc) and then a budget can be created to achieve this goal.
- Set targets per person
Holding everyone accountable is important, but you need to be realistic. For example, my eldest son is tasked with helping me with computer tasks for pocket money as he’s knowledgeable in that space, but one of my other sons likes maths so he is tasked with coming up with ideas for how to cut costs in the household. Last week I suggested ordering pizza for dinner, and he said that we could cook it at home for cheaper and put the money we would have spent on the meal into our ‘goal’ account – so we did. Holding everyone accountable keeps everyone on track and motivated.
- Paint an end goal, and make it enticing
It’s like when you want to lose weight and look at the clothes you’re working to fit into, people of every age want to be able to see that the sacrifices they are making will lead to something good in the future. With children, it’s important to make sure you have shorter time scales to track progress (three months, six months, a year, etc) so they don’t lose focus.
Helping teach your children to make smart money choices early will help them hugely later in life, and it’s surprising how much parents learn through this process, too.
- Schedule a regular family finance meeting so it happens
- Decide together on a family goal with a timeline and budget to achieve it.