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Are you currently in a financial bind, but don’t know how to talk to your family about it? Do you want to let your loved ones know that challenging financial times are in their future?
If you have never talked to your family about money, or the financial turmoil you are juggling behind the scenes, it is time to have an honest conversation.
Discussing money with family and friends is often viewed as a taboo subject. You’ll hear people say, “No one needs to know about my money. It’s personal. We may live in the same house, but I don’t want you in my business.”
Yes, your financial situation is personal. Yes, you have a right to retain your privacy. Yes, talking about your finances can be tough.
However, even with all of those truths, when your financial situation directly impacts someone else, that person deserves to know what’s going on. They deserve to hear the truth so they can brace themselves for the future.
As a family, you can make a plan together.
Wouldn’t it be great if you didn’t have to carry the burden alone?
4 Tips to Prepare for a Tough Financial Discussion
1. Talk About Money
To complete a difficult task, the first action is always simple – begin. You must take the first step.
If you want your children to learn about saving, if you want your family to be prepared if you lose your job, if you want your spouse to be financially ready for your retirement, you have to talk about money.
Sadly, it is common for children and spouses to know nothing about their family’s financial state until disaster strikes.
Have you heard of a family suddenly having to move because they can no longer pay their mortgage? Children having to change schools, or drop out, because their parents can no longer pay tuition? Children who have to suddenly expect less for holidays and birthdays because their parents no longer have the means to buy the things they used to buy? Spouses devastated because their husband or wife died and now the remaining spouse is destitute?
The stories of people being blindsided by life’s financial changes are endless. The irony is that someone knew what was coming, and decided not to talk about it.
Talking about money doesn’t have to be complicated. You make financial decisions every day. To begin your money discussions, talk about simple things. For example, discuss the prices of goods at the store and how those prices fit into your budget. Involve your entire family in grocery shopping, vacation planning, and household budgeting.
When talking to your children, you don’t have to get into every detail regarding your income or the myriad of bills you pay. However, you should give your children a sense of whether you are living comfortably or stretched to the max. Include them in family discussions that pertain to them, their livelihood, and their wellbeing. Help your children understand what it means to make sound financial decisions.
When talking to your spouse, partner, or other adult remembers of your household, discuss your budget, plans for retirement, future career paths, bank accounts, life insurance, and the earning potential of your investments. Whether you have joint accounts or separate accounts, make sure you are on the same page when it comes to your finances.
Ongoing discussions will make it easier to talk about money when times are good and when they are bad.
Step one is simple. You have to do it.
If you want to get comfortable talking about money, open dialogue is the key.
2. Have Many Conversations
You don’t have to discuss everything in one sitting. In fact, you should set a regular schedule for when you talk about your finances.
Should you talk with your family once a month, once a quarter, or every six months? Choose a timeframe that is right for you and your situation.
If you are new to having financial talks, talking every day is probably too much and talking once a year is probably too little. Begin with weekly financial conversations. Then, progress to monthly financial talks.
As you and your family become more comfortable talking about money – and everyone understands your financial situation – increase the amount of time between your scheduled financial talks (e.g., meet as a family every other month, then every three months).
It’s okay to talk about your finances on a daily basis. However, if you are new to financial discussions, or nervous about talking with your family, a regular meeting schedule will help you with your plan to have open, honest talks. Put the dates on your family calendar and get started.
If you have a financial emergency, call a family meeting. Emergencies take precedence over your regularly scheduled talks. During an emergency, everyone needs to be made aware of the financial situation as soon as possible.
3. Don’t Wait Until You Have an Emergency
If you wait to talk about money when you have an emergency, it’s too late to talk.
Emotions are high. Stress levels are through the roof. Everyone wants to solve the problem now, and you may not be in an objective state of mind.
When the immediate goal is to deal with the emergency and get back to a state of normalcy, you’re thinking in the moment and you may not be able to process the entire situation.
The sooner you talk about your money situation, plan for emergencies, and implement regularly scheduled conversations, the more confident you will feel about tackling emergencies.
4. Be Honest With Yourself and Your Loved Ones
If you are dealing with a tough financial situation right now, you may have to skip tips 1 through 3 and begin here, with tip 4.
Be honest about your financial situation.
An honest discussion is a teachable moment for you and your loved ones.
If you are struggling to provide for your family, share the story of your struggle with them. Work together to find a solution.
If you know hard financial times are on the horizon, let your family know what to expect and how upcoming changes will affect your future.
If you are embarrassed, depressed, or anxious about your financial situation, be honest with yourself about how you got where you are and what you will do to overcome your misfortune.
Write down what you want to say. Underline the most important points. Outline a preliminary plan of action.
If you become emotional and find it difficult to speak, look at your notes. Your written words will help you focus on telling your loved ones what they need to know.
Tell your family the truth. Speak calmly. Don’t play the blame game, especially not in front of your children.
Develop a plan. Focus on the future. Put a plan in place that will prepare your family for your next tough financial dilemma.
If your financial news is upsetting, and your family is too angry, overwhelmed, or saddened to make a plan, consider taking a break for a few hours to give everyone a chance to process the news. Then, come together again as a family. Work together to develop a plan.
Your loved ones deserve to know about your family’s financial state. Have an honest talk to prepare them for tough financial times.
Become economically savvy. Read Economically Savvy: Your Personal Guide to Wealth and Financial Wellness.