How to make financial planning a family affair
By Hester van der Merwe
Just as a ship’s captain is ultimately responsible for the wellbeing of those aboard his vessel, managing the family finances is serious stuff, strictly to be dealt with by the head of the house, right? Think again… This might have been the norm in the past, but things are changing, and they’re changing for the better.
Money touches every member of the household, no matter what age or stage of life. The captain of the ship is only responsible for his passengers up to a certain point. All members of the family can and should be involved in the decision-making process of life, and this absolutely includes money matters.
Here’s why money should become a family affair.
Absence of the captain
It can easily happen that the head of the family is suddenly absent. It might be a temporary absence, due to sickness or work-related commitments, or it could be permanent due to divorce or death. In any of these instances, it’s vital that the remaining members of the family are equipped to take the helm and steer for themselves.
The inevitability of growing up
For new parents, it feels as if the period of changing nappies, remembering the Tooth Fairy and kissing bruised knees stretches ahead of them endlessly. But those of us with grown-up children know that this phase passes in the blink of an eye. Before you know it, it will be time for your children to set sail and leave port. The only way they’ll manage in the wide world is if you have given them the skills to do so.
How to get your sea legs
Changing direction is not easy. This certainly applies to the habit of making financial decisions without consulting the rest of the family. You might feel that your authority is threatened, now that you’re taking the opinions of others into account. After all, you’ve always acted in your family’s best interests, and you’ve weathered many a storm doing so.
But turning money into a family affair shouldn’t make anybody feel less empowered. Rather, it should be seen as a tool to strengthen family bonds. It doesn’t have to happen in an instant – a ship’s captain would never simply hand over control to someone and expect them to know what they’re doing. Start simple, and start now, with small steps that will ultimately make a huge difference.
The first of those steps should be to ensure that there is complete openness between partners in a long-term relationship. It’s not always easy to discuss money, since it can be quite an emotional subject. I highly recommend that you involve your [subs: keep upper case] Certified Financial Planner (CFP) to facilitate the process. If you find that it’s a particularly thorny subject, you might also have to include some financial coaching. Seeking professional help will enable you to identify your blind spots and learn what doors will open up for you and your partner if you change your approach to money. Remember, you’re in the same boat. Pulling in different directions will only cause frustration, whereas a synchronised team effort will minimise stress in your relationship.
Ordinary seaman to chief officer
Once you’re comfortable with the financial team dynamics between you and your partner, it’s time to include the children. Of course, you won’t ask primary school kids how much to spend on medical aid or what the optimal contribution to your retirement fund should be. But don’t be scared to select a portion of the monthly budget to discuss with the children – maybe the portion allocated to recreation? Let them give their opinion about how much to allocate to saving for an annual holiday, how much for a shorter weekend camping trip, and how much to spend on things like takeaways.
Let them learn by allowing them to make small mistakes – for example, using the entire eating out allocation in the first week of the month and then having to wait three weeks for the next treat. More information can be shared as they grow older, thereby establishing an understanding of the overall composition of the family budget. By involving your children in this manner, you will create financial awareness and encourage a more responsible outlook when it comes to money.
It’s time to include your family in the financial decision-making process. Do it organically, as described above, and you’ll not only make your own life easier, but you’ll have a happier relationship with your partner and you will ensure your children have all the knowledge to look after themselves and succeed when they leave home.
Hester van der Merwe is a CFP professional at Ultima Financial Planners. She is the Financial Planner of the Year 2020/21.