Family finances and tough conversations

Discussing money matters with loved ones can be hard… in fact, for many people, the topic of family finances can be a daunting one to approach.

Whether it’s your partner, your children or even your parents, it can be a difficult conversation to start and even more challenging if there are undisclosed financial issues that need to be resolved.

But open communication is vital to make sure that financial goals are understood and that everyone can nurture positive and productive attitudes towards wealth management.

Financial stress is sometimes a factor in relationship breakdown. No matter how strong the relationship, talking about money can cause ripples that have a significant negative impact on the stability of the partnership.

To reduce this potential impact, it’s important that both you and your partner are completely candid about how you handle family finances. You definitely don’t want to keep spending habits secret… if you are prone to the occasional splurge on your wardrobe or you have a separate bank account where you are saving for your dream fishing boat, now is the time to talk about it.

When you do sit down to discuss your finances, make sure it’s in a comfortable environment, and be prepared – have your laptop or a notebook with you so that you can look at all issues, including budgeting and spending, savings and investments – both short and long term, as well as your retirement plans.

It’s all about setting realistic goals that you can work towards. Discuss what you both want to achieve individually and as a couple. Whether it’s paying off debt, building your wealth or planning for retirement, being clear about your financial priorities is essential. You won’t always agree, but you can find a suitable compromise. Remember that for your family finances to work you need to be on the same page as each other.

It doesn’t matter how old your children are… whether they are in primary school, are teenagers or well into their adult life, there are benefits to discussing financial matters with them.

Encouraging sincere conversations about money can help create learning opportunities and also foster openness that will last for years to come. By removing the uneasiness of the topic and normalising ‘money talk’ you can help them form good habits that support the creation of their own pathway to wealth.

It’s important not to hide your own financial challenges or lie about your family’s financial situation if money gets tight. Sharing the truth will reinforce open communication and also help them become familiar with concepts such as budgeting, savings and debt management.

For younger children, try including them in family budget meetings. Talk to them about the regular bills you have and get them involved in brainstorming ideas around ways to reduce costs. Who knows, they might come up with a great suggestion that you can easily implement!

If your kids are older, it might be more appropriate to talk to them about their own financial position. Will they have a debt from their education or are they considering taking out a personal loan to buy their first car? Discussing consequences is a critical part of this conversation.

Of all the financial discussions, talking to your parents can be the most awkward. For the majority of your life, they have given you advice, but as they get older you might need to step in and help them manage their finances. It’s important that their retirement plans support them through their golden years, so if you have concerns, we recommend seeking professional advice.

Broaching the subject might require some careful consideration. Perhaps you could do so under the guise of reviewing your own position… you could talk to them about your plans and ask them if they have considered certain aspects of their financial future. Gathering the information and demonstrating your interest can make it an easier conversation.

Don’t forget that there are many different government entitlements and unless they are actively monitoring changes, they might not be aware of their own eligibility. It can be a touchy subject, but if you are well prepared you can achieve positive results. Read more Financial Planning articles.

We understand that money matters can be fuelled with emotion. Complex family finances can cause stress and unwanted conflict.

If you find yourself unsure of how to move forward without jeopardising your own wealth, then we recommend contacting a financial adviser for professional guidance.

To find out how First Financial can help you, contact our team today.