Smart Choices: The Guide to Finances and Philanthropy

HOME | CONTACT US | SITE MAP | ACKNOWLEDGMENTS

Where do you
stand?

Understanding
family finances

Your family
spending plan

Making the most
of your money

Family giving values

Making a family contribution

Resources

Understanding
family finances

In this section, you will consider the benefits of discussing finances as a family, learn tips for working together on family finances, and learn about the specific responsibilities of parents and children concerning money.

Why plan together?

When it comes to family finances, parents tend to run the show. Parents earn most of the income in the family. They also usually pay for major costs, such as housing. Some parents believe that money is a private matter. They don’t discuss finances with their children. This approach can leave children confused. Children grow up viewing money as a “mystery subject.” They know it’s there, because they see it operating. They’re just not sure how it works.

Discussing finances with the entire family can have many benefits. Among them are:
	Children feel empowered. The subject of money is no longer mysterious. Kids feel a part of family decision-making.
	Children become better money managers. They learn from helping parents use money management skills.
	Parents feel relieved. They don’t have to carry the entire burden by themselves.
	Family finances can improve. Family discussions invite new ideas from all family members. These ideas can provide new ways of earning or saving.
	The family feels more united. Working together on finances can help families bond. Family members can experience problem solving together. They also work together to achieve goals.

Randi Burkett

Randi Burkett, 17, is a high school student from South Carolina. She’s from a single-parent home. Her mother was recently laid off from her job. Randi’s mother has been open with the family about her situation. This has helped Randi to deal with what her family is going through.

Randi understands why some parents don’t talk to their children about finances. “Parents don’t want their kids to have to worry about money,” she said. “They think it’s up to them to have to worry about whether the bills are going to get paid on time. They don’t want to let their kids down.”

Yet, Randi is happy that her mother chose to be open with her and her sister. Because she knows the situation, Randi feels more prepared. “My mother worked hard to get us where we are now,” Randi says. “Now, she doesn’t even have a job. We know that in the middle of the month, it’s going to get kind of hard. She doesn’t have any other income coming in. So we’re really starting to budget, to make it through the whole month.”

Randi feels fortunate that her mother communicates with her and her sister. Because Randi understands her family’s finances, she can help out. “I won’t be asking my mom to buy a pair of $100 shoes if I know that we don’t have the money. That would be adding a burden on her. As long as she knows that I’m happy and I’m fine, then it’s OK. If I were to tell her, ‘Ma, I want a pair of Jordan’s and they’re $137,’ I know she would go out of her way to get them for me. Even if she didn’t have the money to do so, she would still get them because I want them. That’s just the kind of mom that she is.” Now that Randi knows her family’s situation, she can be more understanding. She can take her mother’s perspective into account.

Tips for working together

For some families, working together on finances is a totally new idea. It requires discipline, effort, and compromise. Here are some tips to keep in mind as you work together:

	Hold regular family meetings. Set a regular meeting time. Once per week is ideal. Choose a time when everyone can attend.
	Prevent interruptions. Turn off the phone and television. Show that you take your meetings seriously.
	Come to agreement. Financial decisions should be reached by consensus. That means everyone agrees. If you can’t come to agreement, don’t make a decision. Save the issue for your next meeting.

As a parent

•	Think of yourself as your child’s guide or advisor. Instead of dictating choices, help your children learn to make their own decisions wisely.
•	Offer encouragement and praise rather than criticism. Most people, including kids, learn better when they feel supported.
•	Be open to your children’s ideas. Often they can lend a fresh perspective. You might even learn a thing or two.
•	Let your children learn from their successes and their mistakes. Don’t be tempted to “do it all for them.”

Parent responsibilities

Parents have a special responsibility when planning family finances and that is to serve as guides for their children. Remember, your children will learn more from what you do than from what you say. So, make a point to model smart financial behavior. If you don’t know how to handle an issue, seek help. Your children will learn problem-solving skills from watching you.

Children’s responsibilities

Learning from your parents can be challenging. When it comes to money, you may feel ready to “do it your way.” You also may see things differently than your parents do. It’s important to keep an open mind when discussing family finances.

		Listen to suggestions. Your parents have been managing money longer than you have. They may not be perfect, but chances are they’ve got some good ideas.
		Offer your insights. Don’t be tempted to think that your parents “know it all.” Everyone has room for growth. Your ideas might help your family move forward.
		Be honest with yourself. You might get some guidance from your family on how to better manage your money. Look at yourself realistically. How could you improve.

RETURN TO TOP

PRINTER FRIENDLY | TELL A FRIEND