Financial literacy begins at home. According to a recent Harris poll conducted on behalf of the National Foundation for Credit Counseling, more people learn about personal finance at home than they do online, from financial professionals or in school.
While family plays an important role in financial education, clearly there are some gaps in that education. The NFCC survey found that 71 percent of consumers admit to having financial worries. Thirty-two percent are saving nothing for retirement, and 34 percent carry credit card debt over from month to month.
Some of those worries and mistakes could be avoided with better communication with family, friends and colleagues about financial knowledge. Toward that end, here are six conversations you should have about money:
- With your fiancée about goals and principles. Before you get married, you and your intended should have wide-ranging discussions about money. Talk about what you want to save for and how you intend to do it, how you look at the balance between career and lifestyle, and what your attitudes are toward debt. These are not romantic issues, but incompatibility on these matters can lead to trouble down the road, so you should address these things before your wedding day.
- With young children about earning and saving. Once your children are old enough to recognize that money buys things, make sure they understand that money does not magically appear in your wallet every day. They should understand the connection between how hard you work and the money you make, and they should be willing to put in some effort to work and save for the things they want.
- With your boss about your value and potential. Don't just ask for a raise -- make a case for a raise in terms of how you add value for your employer. Also, discuss what growth avenues match up well with your skill set, so you can get an idea of what you'll need to do to get additional opportunities. A good boss will appreciate this businesslike approach.
- With your spouse about progress and problems. As mentioned previously, a couple should start out marriage with an understanding of where they want to go financially, and then there should be regular updates (at least once a year) about whether the plan is on track and what obstacles have arisen.
- With teenagers about responsible borrowing. Since teenagers may soon start fielding credit card offers and considering student loans, this is a good time to explain how debt and interest work, and the importance of not sacrificing the future by taking on too much debt.
- With your parents about elder care plans. People reaching retirement age should pick a trusted family member to help look after their affairs in case they are unable to, and should think through things like where they would want to go if they need continual care. Unfortunately, people are reluctant to initiate these plans, but gently prompting your parents to do it early allows them to make decisions about their future while they can deal with it clear-headedly and from the distance of a few years.