How to hold a monthly family finance meeting
Posted
Jun 06 2008, 12:29 AM
by
Karen Datko
Rating:
This post comes from Trent Hamm at partner blog The Simple Dollar.
Prior to our financial meltdown, my wife and I never sat down and talked about our finances. Right after the meltdown, we talked about things almost every day. Through our recovery, the number of meetings slowly declined to a monthly family financial meeting.
The meetings have become a big part of the financial glue of our marriage.
The conversations keep us on the same financial page and ensure that we are open and clear about our goals, our dreams, our mistakes, our challenges, and our shared path in life. They allow us to ensure we are both sticking to our better behaviors and using each other as an inspiration for making good choices.
If you're in a long-term relationship, I couldn't recommend a monthly financial meeting more highly.
What our meetings are like
Our meetings are pretty simple. We go through credit card statements and bills, talk about any changes we should make, plan for anything that's coming up, and set some goals for the next month, usually to limit unnecessary spending and decide where our budget leftovers will go.
We don't need a specific agenda or meeting time. We meet on roughly a monthly schedule.
Some keys:
Everything is an open book. There should be absolutely no secrets in such a meeting. If your spouse wants to know about a specific spending choice, be completely open about it, not defensive. If you're getting defensive, that means you have something to hide -- and that means there's a problem that needs to be addressed together.
Make goals a big part of the meeting -- not only big, long-term goals, but the goals over the next month that will help you get there. Set goals together, even if the goals are individual in nature. Then, throughout the month, offer each other encouragement. It's hard to break a bad spending habit or make new financial choices. Use the motivation of goals and the constant encouragement of a loving partner to make the changes easier.
This is a great time to work on a simple budget together. Talk in detail about your spending plan for the coming month and also about your challenges and successes over the past month. This discussion can provide a lot of insight into where you're going -- and where you've been. That information can help you to make better financial choices.
Love and respect each other, even if you have differences of opinion. Money brings about strong feelings. Don't let those feelings overshadow the more important things in life. One good way to do this is to hold your partner's hand during the meeting.
Involve the kids
I am a big advocate of involving children in these meetings as early as possible, by age 7 at the latest. Allow them to bring their own financial picture to the table. Pay them an allowance, have them budget the money, and have them talk about their own successes.
Here are some thoughts on how to incorporate kids into the picture:
Keep the open-book philosophy. Everything should still be wide open so that your kids can see the financial reality of being adults. They need to know how much you're spending each month to keep the roof over their heads and food on the table, and get an idea of all the little expenses that eat away at the big pile of money.
What about privacy? Many parents like to hide behind a veil of privacy, saying it's none of their children's business how they spend their money. My argument against that is twofold: First, it makes a great educational opportunity for your kids impossible. Second, it says there's something in your spending you're ashamed of. If there's shame, that means there's something you need to improve in your life.
Naturally, I see no problem with eliminating a few items with black highlighter in order to hide an upcoming gift. But if you're sealing away most of your spending from your children, they're missing out on an important learning opportunity.
Let them offer input about goals -- and have them set their own. When you're making major financial choices, let them have a voice in the decision, but don't let them run the show. However, you should allow them a lot of control over setting their own goals, both over the next month and the long term. Help them identify good things to save for and encourage them to work toward those goals. This goes hand in hand with the idea of allocating an allowance for spending, sharing with others, and saving -- in effect, budgeting for kids.
Make some adult economic choices available to your children. This concept is advocated by David Owen's excellent book "The First National Bank of Dad." Owen says you should create a "virtual" bank for your kids with a high interest rate -- say, 5% a month -- to teach them the value of saving very early. Let's say they have $20. They have the choice of putting that $20 in the First National Bank of Dad, where it will earn $1 in interest every month, or spending it immediately. All they have to do to earn that $1 each month is simply not spend it. It's a real choice for young children and introduces them to the concept of saving versus spending. It also offers plenty of encouragement to make a good choice.
The idea of a monthly money meeting is really all about communication. The more we talk about money as a family and the more we encourage each other to make good choices, the more likely we are to make good choices over the long haul. Even better, it's a splendid opportunity to use ourselves as examples for our children, teaching them how to be financially responsible adults.
Other articles of interest at The Simple Dollar:
"Personal finance and intrusion"
"The financial implications of a third child"
"The over-gifting relative"
