Finance

5 Tips to A Healthy Family Discussion About Finances

It’s no secret that money has the power to destroy relationships. Even blood-related siblings who have had each others’ backs for decades may end up fighting over inheritance money. That’s why the elders always advise relatives to be careful when talking about money. As the old adage goes, money is the root of all evil.

However, this line of thinking is very dangerous. Money is an inanimate object, and it has no power to destroy any relationship by itself. What leads to trouble, however, is the lack of proper communication. Many arguments about money stem from misunderstandings, so it would only make sense to work toward healthy, meaningful discussions with your household members.

Do you feel awkward talking about money? Here are five simple yet effective tips on how you can properly communicate ideas and thoughts about money with your loved ones:

1. Throw All Judgment Out the Window

Reports show that many are hesitant to talk about finances out of fear of being judged, even with close relatives. These findings aren’t surprising since everyone has a different approach to money, and it’s common for people to challenge opposing views and ideas.

However, you shouldn’t let your preconceived notions cloud your reasoning. The best approach here is to throw all your judgment out the window and keep an open mind.

Do your best to understand what your household members are saying. There’s a difference between listening and understanding. Otherwise, you and your family will end up going in circles if nobody makes an effort to truly understand the situation from the other party’s perspective.

Also, please get rid of any stigma or stereotype you have. For example, let’s say your older brother is a little bad at handling money. Yes, he might not have the best suggestions, and you probably won’t use most of his ideas, but he still deserves an audience. Remember: respect begets respect. Don’t expect people to listen to you if you don’t listen to others as well.

2. Identify the Most Common Pain Points

Contrary to popular belief, siblings seldomly fight about money. Research by Ameriprise Financial shows that while 57% of the general U.S. population says they have different financial management strategies from their siblings, only 17% have fights about money. Talking about money with your family appears to be far less disastrous than most make it out to be.

Despite the positive survey results, it’s still an undeniable fact that family members fight over money. However, there are ways to prevent specific issues from arising. The best approach here is to identify the most common pain points with your family members right from the get-go. These are the issues guaranteed to cause a commotion.

Now, every family has a different set of pain points to avoid. However, the same survey conducted by Ameriprise Financial shows that 70% of family conflict regarding money stem from the following:

Division of Inheritance Money

Dividing inheritance money has always been a tricky situation. In most cases, family members would hire unbiased legal representatives to go over the deceased’s last will and testament. Sadly, this tactic doesn’t always resolve the issue. If worse comes to worst, the siblings might even end up suing each other and elevating the case to court.

Parental Favoritism

The thing with parenting is that it’s almost impossible to treat all your children the same. Yes, you’ll love them equally. However, you’ll likely need a different approach when disciplining, rewarding, and guiding each of your kids. Unfortunately, many kids see this as a sign of parental favoritism.

Studies show that children who feel unfairly treated often experience long-term side effects, such as insecurity, lack of confidence, and aggressiveness toward siblings. These effects manifest regardless of whether parental favoritism truly existed or not.

Fairness in Financial Support

Parents often provide children with different levels of financial support. It’s not that they favor one child over the other, but in most cases, the inequality stems from their children’s differing needs. Unfortunately, some see this as a sign of parental favoritism as well.

3. Start With Small Preparation Meetings

You don’t have to hold a general financial planning session with every household member right off the bat. Create subgroups first. This preparation strategy offers multiple benefits, including:

Easy Scheduling

We all know how difficult it is to gather all family members in one room, even if it’s just for a few minutes. Everyone’s schedules always seem to overlap. That’s why it’s best to set smaller meetings with individual members first.

Pre-Meeting Planning

Talk to individual family members first. The general meeting will go a lot smoother if everyone’s already on the same page. Find out each individual’s pain points, struggles, and concerns.

Less Mental Strain

Talk to family members you go along well with. Yes, you’ll eventually have to talk to every single individual in your household, but it would be much easier for you mentally if you didn’t have to deal with snarky relatives right from the get-go.

Reduced Risk of Conflict

If two or more members of your household always butt heads, we strongly encourage talking to them beforehand. Explain to them the importance of this meeting, why they should observe proper decorum, and how they can convey their ideas efficiently without aggravating the opposing parties.

4. Set a Formal, Professional Atmosphere

A casual, laid-back atmosphere when talking about finances might be easier for everyone, but it also leaves room for arguments, snarky remarks, and borderline offensive jokes. Managing household finances is a very serious matter. As such, the family should discuss it accordingly.

There are several ways to set a professional, serious tone for your family meeting. These include:

Setting the Meeting Weeks In Advance

Spontaneous meetings are never a good idea. Give your household members at least a couple of weeks to plan and prepare for the meeting. Rushing them will only lead to half-baked, inefficient arguments.

Refraining From Making Jokes

Yes, exchanging pleasantries is a given, but set aside the jokes for now. Make sure even your fun, easygoing relatives refrain from cracking funny remarks or playing with the kids until the meet ends.

Holding the Meeting In a Serious Environment

The key to hosting a professional meeting is to hold it in a serious setting. Don’t hold the meeting in a common area that everyone associates with fun, laughter, and jokes.

You can even rent out a small space in a coffee shop, library, or restaurant if your family is too comfortable and relaxed at home. Doing so also gives everyone a reason to dress up a bit. Overall, the goal is to act differently than how you usually do so people will take the meeting seriously.

Focusing Solely on the Meeting

Turn off the television, keep the toddlers away, and ask everyone to put their phones on silent for the duration of the meeting. You need everyone’s undivided attention.

5. Don’t Take Things Personally

We understand that every family has issues. However, if you want the conversation regarding finances to go smoothly, we strongly advise leaving all grudges and resentments behind. This meeting is about household finances—nothing more and nothing less.

Also, don’t make the mistake of bringing up unrelated issues from the past. Nothing escalates arguments faster than digging up past events. Try to maintain a level head and stay composed throughout the discussion.

Extra Tips On Managing Your Family’s Finances Properly

Here are some solid tips on how you and your family can effectively manage the household finances:

Openly Declare Large Debts

It might be a good idea to advise family members about large debts that could compromise household finances. Of course, limit your audience to the biggest decision-makers. Openly declaring all your debts to every single household member might lead to misunderstandings.

Use Mobile Credit Cards

In this day and age, where hackers have access to the latest phishing technology, you need to keep your finances extra secure. One way to do so is by using mobile wallets. Mobile wallets like PayPal are more secure than standard chip cards since data is encrypted during payment transactions, not transferred. This strategy leaves fewer chances for hackers to attack.

Open the Right Credit Card Accounts

Contrary to popular belief, credit cards aren’t debt traps. You can utilize them to improve your credit standing, get huge store discounts, and even acquire freebies. The key is finding a credit card plan that suits your lifestyle. For example, those who primarily spend money on household expenses (e.g., grocery and gas) can opt for versatile options like Chase credit cards.

Don’t Be Afraid to Ask For Help

CNBC reports that the average American adult carries around $90,000 in debt. This amount is not something you can quickly pay off alone if you’re also feeding your spouse, relatives, and kids. With that in mind, don’t be afraid to seek help. These days, most households have at least two breadwinners working toward paying off household expenses.

Final Thoughts

Never forgo the proper management of your household’s finances. We understand that talking about finances with your family is hard. You’d probably want to delay these types of conversations as much as possible to avoid any type of conflict. However, purposely avoiding talking about money has even greater consequences.

The key is to keep things civil when meeting your family about money. Don’t blindly dismiss the opinions of the younger household members, do your best to understand things from your family’s point of view, and most importantly, don’t take things personally.

How do you and your family manage your finances? Share your tips and techniques with us in the comments section below!

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