Involve your Family in Financial Matters

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Being in a relationship often means revealing your darkest secrets — including those that are financial in nature. Yet 27% of millennials admit to keeping money-related secrets from their partners. But here’s the problem with keeping such secrets: They could spell trouble for your relationship. In fact, 31% of millennials say they’d consider breaking up with a partner if they discovered he or she had hidden debt or a terrible credit score.

What kind of Money Secrets are we keeping?

We did some research and found out that 40% of Brits are keeping financial products a secret. Of those, the top three are:

  • Over one in three of us are hiding credit cards (37%)
  • Nearly one in four of us haven’t mentioned we have a personal loan (23%)
  • One in five has a secret savings account (21%)

Are Money Secrets an issue?

You know the old proverb “A man who can keep a secret may be wise, but he is not half as wise as the man with no secrets to keep.”

Hiding debt is a miserable thing. It not only impacts your wallet and your own mental health – but it will impact your partner and family. The longer you hide it, the worse it’s going to get. 

We’ve heard time and time again that once you spill your debt secret with your partner and get help – life starts getting better. You start feeling better. 

3 ways to deal with Family Members who keep Money Secrets

  1. It should be part of the normal conversation in a household about allocating money for specific uses. It is not fashionable to make household budgets anymore. But the practice has a huge merit in involving members of the family to discuss the choices and make decisions. Except for the super-rich household, most have a limited amount of money which must be allocated to various uses. Instead of treating every spending decision as a bottomless pit into which any amount of money can be poured based on whims, the family can get used to treating them as serious decisions on choice and allocation.
  2. Make the saving goals the family’s joint decision. There’s no need to be secretive about what is being saved and invested. The family must know what the larger future goals are, and why sacrifices must be made in the present to make that happen. The postponement of instant gratification and the ability to think long term are important skills that everyone in the household will benefit from. Larger financial goals such as buying a property, funding children’s education, saving for retirement are all important to everyone in the family.
  3. Foster the money culture of the household by being logical and consistent while making financial decisions. Value for money, caring for objects of value, evaluating objects over experiences, developing emotional intelligence about money, are all habits a household must build over time. Money decisions are made every day, and some see it as bothersome to bring it up too often. Which is why setting broad principles and adhering to them helps. The mandatory spends on food, education, utilities, EMI, transport might need only a one-time discussion about how much and what the limits are. But the discretionary spends on entertainment, holidays, impromptu purchases, and so on, can add up. If these remain impulsive decisions that are made on the fly with no consistency, no one learns how to make them. Be aware of the dangers of centralising these decisions.

5 Reasons to involve your Family in Financial Matters

1. Involving your Spouse in Financial Planning

In our country, most financial decisions are taken by the bread earner or the head of the family. In this process, the views of the spouse are generally not taken into consideration. This may be because the spouse lacks financial knowledge or interest in the financial affairs of the family. However, as irrelevant as this may sound to you, it is extremely important to include your better half while planning or reviewing your financial plans. You might be surprised at the inputs your spouse can provide while planning your finances. The final goals of you and your spouse may remain the same such as educating and getting your children settled, saving for your retirement and medical emergencies and so on. However, her views regarding each goal and how she would prefer them to be realised might be different.

2. Team Effort

It takes discipline and efforts from all the family members to ensure that the financial goals of the family are fulfilled. You must ensure that you have a meeting with your spouse and children to determine the monthly budget and review the expenses. Only if all the members of the family mutually take efforts for curbing unnecessary expenses and work towards a common goal, can the financial objectives of the family be met.

3. Investments and Liabilities

Nomination is a process where you nominate an individual to rightfully claim your assets in your absence. Appointing a nominee for all your assets will reduce the hassles faced by your family in case of your death. It is imperative that your spouse knows about all your bank accounts, investments and liabilities. This will ensure that she never faces helplessness and is never misled by any of your debtors or creditors in your absence. Make sure that you have disclosed the whereabouts of your life and health insurance policies to your family.

4. Financial Independence

Although involving the family members in handling all the day-to-day finances may not be necessary, it would be prudent to discuss with them the monthly budgets and expenses. You must give your spouse and kids an opportunity to handle some of their personal and household expenses. For instance, let your spouse pay certain monthly expenses if he/she is not already doing so.

5. Creating Awareness among Children

Many of you may have experienced that today’s generation is very smart and are fast learners due to their inquisitive acumen. Schools today are also training children about personal finances, but having said that it is imperative to involve your children while taking financial decisions for the family, especially the ones that will affect them, and infuse in them the value of money no matter what your economic status is. Today, while most parents want to provide their children with the best education of all, it is imperative to involve the child while creating a financial plan for the said goal.