Are you talking with your family about money?

One of the most important subjects you can talk with your kids about is money. Indeed, it is often a good idea to talk about finances as a family. Having money discussions with your children can be a good way for them to get a handle on what is happening in your family, as well as provide information that they can use later on in life.

 Reluctance to talk about money

 We have a general aversion to discussing finances with our friends and extended family, and there is some reason for that. However, discussing money with your children and your life partner should not be something to shy away from.

It can be hard to talk about money, especially when finances are tight. Having regular discussions about the state of household finances and shared money goals, though, can serve as a valuable resource for your children, as well as draw the whole family closer together.

How to talk about money as a family

 First of all, it is important to assess where everyone is at in terms of maturity. You want to cover topics that are general, and that most of your family members can understand. Think about the terms that you will need to use in order to make the discussion understandable to younger children.

Realise, too, that you don’t need to go into detail about family finances. There is no reason to pull out the bank statements and go through every item with the whole family.

You can, though, talk about your budget in general terms, such as saying, “We have $XX for entertainment this month. Would you rather go to a movie, or go out to eat?” In tough economic times, explain that money is tight, and everyone needs to cut back. Tell your family what you will do to help the family finances, and encourage each member of the family to name something they can do to help.

 A money discussion is also a great time to talk about shared financial goals. You can talk about planning a vacation, or saving up for a new TV for the whole family. Create a plan that shows how much is needed, and how much the family needs to set aside each month to reach the goal. Encourage everyone to contribute. Children will see how to plan for purchases, and you can encourage them to follow the same process with their individual wants.

 Set aside a regular time to talk about finances. You should check in regularly with your life partner anyway, going over the budget and addressing problems or planning to reach goals.

You can have a regular family budget meeting as often as you like. I think once a month is enough for a family money discussion, but others might want to meet more often than that. Create a regular time to talk about money so that family members have time to figure out what they want to talk about.

 You can also set aside time to answer questions about money. Prepare “mini-lessons” on money, addressing basic topics of financial literacy. This way, you can make sure that your family understands the concepts behind money.

 Talking with your family about money is important. Take the time to have these discussions, and your children will grow up with a better grasp of solid money management.