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How to Talk about Money with Your Family

Talking to your family about money shouldn’t be taboo and money conversations can actually bring you closer together

Four in ten marriages end in divorce and couples report financial problems as the #1 cause for argument. The fact is that we just don’t talk about money until it’s a problem.

This is where a lot of family finances and plans go off track by not having everyone committed to the same goals.

Getting your family together to talk about finances and goals isn’t just to make sure everyone is committed. It’s a great support system when you know everyone is working to the same end. Not only will you be able to reach your personal finance goals but you’ll feel closer as a family when you’ve reached them together.

We’ll talk here about how to start your money conversation and how to use it to bring your family closer together. That doesn’t mean you don’t need to have the conversation if you’re single.

My first money mistake was in my early 20s. I was working two jobs and saving every penny for the future. The problem was that I would burn out every six months or so and go on a spending spree. I was just pushing too hard but couldn’t see it because I was singularly focused on my long-term financial goals.

I fell into this saving and splurging cycle a few times, each time pretty much having to start over with my savings. It wasn’t until I talked with a friend about money that I was able to see exactly what was happening. Whether it’s with your family or a friend, you need to talk to someone about your financial goals and how you plan on getting there. This is going to be your support system, your motivation and someone to nudge you back on track when you stray.

How to Start the Money Conversation with Your Family

Understanding that you need to talk about money with your family is one thing. Knowing how to start that conversation is something else entirely. Because we usually only talk about money when it’s a problem, we’ve grown defensive when someone starts talking about finances. People automatically assume there is a problem and a simple conversation can turn confrontational quickly.

It’s important that you start your money conversation off in a positive way and stress that this is the beginning of a new future.

  • Hey, I was thinking about writing out our financial goals and what we wanted to save for. Do you want to sit down and talk about where we want our money to go?
  • I found this website that talks about getting our personal finances on track. I’d really like to start saving for our goals. Do you want to sit down and put together some goals with me?

Making it a question gives them the power and invites them into the conversation rather than telling them this is something they need to do.

It helps to start your personal finance conversation off with goals, those long-term plans for which you want to save. Doing this helps to make all the tough stuff like budgeting and saving more positive because you know why you are doing it. We’ll get into personal finance goals in the next section.

Talking with Your Family about Financial Goals

Personal finance is not about money. It’s about goals. Money is only a means to that end, a way you pay for your goals.

By making your conversations about shared goals, it makes everything a team effort rather than something you don’t like but just have to get through.

A lot of people sit down to plan out their goals and write down, “Retirement, Kids Education, Vacation.”

That’s it. They write down their goals and a week later, they’ve blown through their budget and have forgotten about the goals. They are right back where they started and will probably try again on their finances 10 more times over the next ten years.

Your goals have to be more than just a few words on paper. They have to be real. They have to be a visual image you carry with you.

These big topics like retirement, education and vacations are a fine start but you need to go further. Talk about what retirement looks like for you and your spouse.

  • Where do you want to retire? What’s the weather like? What are some of the things you’ll do on a daily basis like walking on the beach or sitting by the fire pit in the back yard?
  • Do you want to travel? Where do you want to go and what are some of the things you’ll see? How will you get there?

It might sound a little cheesy but actually go through magazines and cut out pictures to represent parts of your personal finance goals. This exercise will not only make them shared goals that everyone will work to but it will make the goals real. You’ll have an image of your goal that will last and will motivate you to budget, save and invest.

Doing all this will also help you figure out how much your goals are going to cost. Too many people have only a vague idea of what they want retirement to look like and no idea how much they need to save.

The Most Common Problems in Family Finances

how to family money conversationsBesides the obvious topics like goals and budgeting, there are a few things you need to talk about with your family. These are the most common problems in personal finance and can ruin you financially and as a family.

  • Overspending is the biggest problem for most families. I get it, shopping is fun. Spending more than you make or even just up to your income leaves no room for those future goals. Whether it comes down to finding ways to save money or getting creative with your budget, you have to talk about how much the family spends on a monthly basis.
  • Lack of planning and procrastination is a big problem for most families. You’re reading this article now but how long will it take you to sit down with the family and talk about finances? Write down a date, sometime this week, that you will start your conversation about money.
  • Overreliance on salespeople and the internet for personal finance decisions is a tricky one. I’ve seen too many people fall for overpriced investing schemes, expensive courses on personal finances and just plain bad advice. On the other hand, there is a lot of great advice on the internet and it’s a lot cheaper than hiring a financial planner. Always look for at least two or three sources before taking anyone’s financial advice. It will help you understand the advice better and will help from going down the wrong path.

Getting Your Kids Started with Personal Finances

Don’t forget to bring your kids in on your money conversations. Good personal finance habits start at home and they last a lifetime.

My mom was never good with money and we struggled. It was a combination of a lot of things, from impulse shopping to just trying to make enough as a single parent to support a family. The fact is that personal finance isn’t taught in schools and our financial habits get passed down from generation to generation. Top it off with the fact that our parents didn’t have access to information like we do today with the internet and it’s not surprising that personal finance became a taboo subject that we only talk about when it’s a problem.

You can’t make the only time your kids hear you talking about money when you are fighting about it with your spouse. What kind of impression does that leave on a kid? For many, it either makes them deathly afraid of money or obsessively driven to make money at all costs.

Remember, the conversation isn’t about money. It’s about goals and what you want out of life as a family. Personal finances fit into it because that’s part of the planning process to reach those goals but money is only part of the conversation. Your kids are part of the family and will probably have to be part of the saving so they should be a part of the conversation.

I run a scholarship every year from the blogs, asking applicants to write an essay about how their parents taught them about money. Many of the essays are about how the student learned not to manage money from their parents or how a big money mistake taught them a lesson.

There are a lot of positive stories too, like one student that shares how her father taught her how to save money using goldfish crackers as a savings account. Chores and other tasks would be assigned an amount of crackers which could be saved and later turned in for money. It’s an interesting idea that teaches kids how to earn money and the importance of saving.

Another scholarship applicant talked about how her mom showed her how to keep a money journal, recording how much she made and spent regularly. It not only taught her about budgeting but also bookkeeping and accounting.

These money conversations you have with your kids will last a lifetime. For better or worse, money plays a big role in our lives. Like the conversations you have with your kids about drugs and sex, do you really want your kids learning bad money habits from someone else?

Talking about money with your family shouldn’t be taboo and it certainly shouldn’t be something which is only a subject when there’s a problem. Learn how to have a regular conversation about family finances and how to use it to bring the family closer together. You’ll fight less about money and will be able to support each other on your way to reaching family financial goals.

Joseph Hogue, CFAAbout Joseph Hogue

An investment analyst by profession, I run two blogs (Crowd101 and PeerFinance101) in personal finance, peer lending and crowdfunding. I've been on both sides of the table as a lender and a borrower and am excited to be a part of the peer movement. With the power of the internet, people are helping other people manage debt and raise money in ways never before possible.

A veteran and Iowa-native, I now live in Colombia with my wife and son. Like so many people, I was once trapped into the money myth and what it means to be successful. After taking control of my finances and learning how to make money in a job I love, I found a level of financial freedom that just has to be shared.

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