More often than not, financial decisions for the family are made strictly by the parents
However, to help your entire family get better at making good money choices, having everyone involved in the process can be key.
Finance isn’t a topic that comes naturally to everyone, and unfortunately, it’s something that is still somewhat lacking in traditional education.
So unless you get your kids involved in making smart decisions at home, they may be missing out on a skillset that can greatly benefit them for the rest of their lives. Plus, it may take some of the pressure off the parents to solely make all the decisions and turn financial decisions into more of a democratic process (to a degree of course!).
So, here are some ways to potentially start making better financial choices as a family.
1. Get rid of the enforcer and make money choices a family effort
In some households there is one parent who handles the finances, and that person makes the decisions (sometimes together with the other parent) about what the family needs to budget, what the family spends, and what they are saving for. But by making it a more collaborative process where the children have a say can not only teach them about making smart choices, but also take some of the pressure off that sole person.
Now, I’m not saying children should be the ones to decide between saving for a house or spending that money on a 5-star trip to Disneyland, but having an open discussion around why the parents make certain major financial decisions can help kids feel like they are involved. Then, for the decisions that parents are happy with either outcome, consider letting your children vote or have a say.
2. Start having regular family meetings
It might sound simple, but gathering the troops (anyone five years or older), sitting around a table, and having open discussions about money and family goals every month or two can be one of the most important steps to take. At your first meeting, decide on a family goal (for example going on a holiday, getting a pet, moving to a private school) and then a budget can be created to achieve this goal.
3. Set targets per person
Holding everyone accountable can be important, but you need to be realistic. For example, my eldest son helps me with computer tasks for pocket money as he’s knowledgeable in that space, but one of my other sons likes maths so he is tasked with coming up with ideas for how to cut costs in the household. Last week, I suggested ordering pizza for dinner, and he said that we could cook it cheaper at home and put the money we would have spent on the meal into our ‘goal’ account—so we did. Holding everyone accountable can keep everyone on track and motivated.
4. Paint an end goal, and make it enticing
It’s like when you want to lose weight and look at the clothes you’d like to fit into. People of every age want to be able to see the sacrifices they are making will lead to something good in the future. With children involved, consider perhaps shorter time scales to track progress (three months, six months, a year) so they don’t lose focus.
Helping teach your children to make smart money choices early can help them hugely later in life, and it’s surprising how much parents can learn through this process, too.
For specific advice customised to your individual circumstances, contact Carrick Aland’s award-winning Wealth planning team on 1300 466 998 or visit carrickaland.com.au/wealth-planning/.
This report is prepared by Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837 (Bridges). Bridges is an ASX Market Participant and part of the IOOF group of companies. This report is prepared by the IOOF Research team for: Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837, Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323, Elders Financial Planning ABN 48 007 997 186 AFSL 224645, Financial Services Partners ABN 15 089 512 587 AFSL 237 590, Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252, RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429, Shadforth Financial Group Ltd ABN 27 127 508 472 AFSL 318613 (‘Advice Licensees’). The Advice Licensees are part of the IOOF group comprising IOOF Holdings ABN 49 100 103 722 and its related bodies corporate (IOOF group). The Advice Licensees and/or their associated entities, directors and/or employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this document or may provide services to the company referred to in this report. The document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of the Advice Licensees. The Advice Licensees and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. The document is current as at the date of issue but may be superseded by future publications. You can confirm the currency of this document by checking the intranet site (links below). The information contained in this report is for the sole use of advisers and clients of AFSL entities authorised by the Advice Licensees. This report may be used on the express condition that you have obtained a copy of the Advice Licensees Financial Services Guide (FSG) from their respective website. Disclaimer: The information in this report is general advice only and does not take into account the financial circumstances, needs and objectives of any particular investor. Before acting on the advice contained in this document, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before making a decision to acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. The contents of this report should not be disclosed, in whole or in part, to any other party without the prior consent of the IOOF Research Team and Advice Licensees. To the extent permitted by the law, the IOOF Research team and Advice Licensees and their associated entities are not liable for any loss or damage arising from, or in relation to, the contents of this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.
