A key to family financial health is transparency -- with your spouse, your children and yourself. Keeping money secrets and lies has you living in an alternate reality, and can have a devastating impact on your real world.
Only the Best for my Child
That cute polo shirt for your 1 year-old, with the designer's initials on the chest, is great, but is it worth twice the price of a generic shirt? Does your teen need an updated smartphone every year, or would the current one suffice? Is it really going to ruin your daughter's entire senior year if she doesn't have that pair of red-soled heels to wear to the prom?
The honest answer to each of those questions is "no." Being good parents means that your children are provided with love, shelter, food, clothing, education and values.It also means teaching your kids financial responsibility.
Once again, this is a clear example of need versus want, and there is a world of difference between the two. Evaluate your motives. Remember not to equate material things with the amount of love your have for your child. The money you save can be huge, but the financial lessons will be even bigger.
We're Young, We Have Lots of Years Before We Have to Worry About Retirement
Have you ever taken the family on a grand vacation and said to yourself: "I can hold off on putting a couple of months of savings into the retirement fund -- at least I'm not going into debt to pay for vacation. Besides, retirement is 30 years away, I have plenty of time to make it up?"
I have news for you: The years go much quicker that you can imagine! Those "couple of months" can easily turn into years of delayed savings. This year marks the 30th anniversary of my first book, Money doesn't grow on Trees, hitting #1 the New York Times bestseller list. Three decades passed, and it seems like just yesterday that I was on "Oprah" for the first time, talking about kids and money.
Not only are you missing out on months of savings, but you're also missing out on all the interest that should be accruing. This can have a real impact on the quality of your "golden years."
I Don't Have to Teach My Kids About Money. They Learn That in School.
No, more than likely they won't. I have explained in previous blogs that only 16 states require students to be tested on economics, and only four states require high school graduates to complete a one semester course in personal finance. So, unless your lucky enough to be in one of those four states, teaching your kids to be financially competent is up to you.
The truth is, you are teaching your kids about money, whether you know it or not. Unfortunately, if you are not making a conscious effort, you can be, passively, teaching your kids the wrong lessons. They watch you handle money. They get mixed money signals, and can pick up your bad habits.
Not teaching your kids will have lifelong consequences. Make a plan. See that your kids grow up financially healthy.
My Partner Takes Care of the Bills and Investments -- I Don't Have to Waste My Time.
Perhaps you think you could make better use of your time than being involved in the business of your family. It's getting done just fine without you. Or is it?
- Joint finances are just that -- joint. How much money is coming into the family, how it is allocated for expenses, investment and entertainment effect the whole family. They are to be decided upon and reviewed together.
- Having regular "partners meetings" fosters money discussions and helps to focus on your goals and needs.
- If one partner exits the family, either divorce or death, the remaining partner must have full understanding of the family finances, institutions and resources.
We Don't Need a Will.
Do you tell yourself that you don't need a will because you don't own much stuff? How about, "My husband gets my stuff and I get his"? Here's a common lie parents tell themselves: "Making a will is depressing, complicated and expensive."
Fifty percent of Americans with children do not have a will. Forty percent of adult Americans have no life insurance at all and over 50 million people in the U.S. have inadequate coverage. Now is the time to get your affairs in order. Who will take care of your kids if something should happen to both of you?
You have to think about beneficiaries and a guardian for your kids. You need to discuss your plans with the guardian. You have to make sure there will be enough money to raise your kids. All of this goes into your will. You don't want your kids to become wards of the state. Get yourself a lawyer now, for their sake.
It's time to come clean. It's a new year and you can start by changing your financial patterns. "To thine own self be (financially) true."*
*William Shakespeare's Hamlet, with a little help from Neale Godfrey.
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