Why Families Need To Talk About Finances

Why Families Need To Talk About Finances
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Working in the financial sector is often challenging for many reasons but one of the most common reasons is the fact that many people don’t want to talk about their finances or money. Money, politics and religion are the three of the taboo topics that no one is supposed to bring up, whether you are with strangers or the most trusted people in your lives. Staggeringly, people are seven times more likely to talk with a stranger about their intimate life details then they are about their current salary. And yet, our lives revolve around our finances and people, particularly couples and families, are less likely to have money problems and communication issues when they make it a priority to discuss finances. For the health of your family, you need to open up about the financial situation.

Should Finances Be This Scary?

Some startling statistics exist that underscore why so many people are more likely to talk with you about any other detail about their personal life than money. A survey conducted by Ally Bank found that more than 70% of Americans believe that it’s rude to talk about money. Furthermore, when it comes to actual discussions about finances, only 39% of people are willing to disclose their income while only 29% would be willing to talk about their debt. How can one even begin to manage their financial situation if they have to treat it like the darkest secret they carry. More startling is that 44% of Americans believe that personal finances are more difficult than death, politics, religion, taxes or personal health. Why are finances this scary to individuals and families across the nation? When they are such an integral part of our lives and yet we can’t even discuss them or open ourselves to new financial discussions, something must be wrong in the codification of financial language.

Finances And Your Marriage

Perhaps one of the most important people to talk about finances is your spouse and both partners should be incorporated into every financial decision. And yet, financial struggles and difficulties are some of the most common reasons for the exponential global divorce rate. Your spouse is your partner in every decision of you life, so it’s surprising that at least 6% of American surveyed have a secret credit card that their spouse doesn’t know about. How do we start centering our financial discussions so our spouses and families strengthen the support system? Talking about it and planning together is the solution. A study at the University of East Anglia found that joint decision making among couples made them less susceptible to making financial mistakes and more aware of financial risks. Involving your spouse in your financial decisions is vital to a healthy familial relationship with money. As with anything in a strong marriage, the first step is open communication.

Teaching Our Children Good Habits

Whether or not we have made strong financial decisions, it’s imperative in our journey to be good parents that we pass on good fiscal habits to our families. One study of college students found that young people that grew up in homes that were more open about their finances were more likely to avoid impulse spending and crippling credit card debt. It’s clear that the generational gap or preconceived notions or even upbringing are the reason the conversation between parents and young people is stopping before it gets started. According to this TIAA study, only 11% of parents are likely to start a conversation about money with their kids while 37% of adult children believe discussing finances is important. When roughly a third of parents and children find the financial conversation difficult, how are kids to learn good habits? Nearly 71% of adults surveyed learned their savings habits from their parents, so it’s clear where the responsibility lies. If you want to make sure that children make strong decisions and avoid the hardships you went through, it’s imperative for you to discuss these things with them.

Families That Save Together Thrive

It’s vital that families bring their finances to the center of their discussions for a number of reasons. Much like any goal that you want to accomplish, writing it down and discussing your goals makes you 41% more likely to achieve them. Furthermore, families that are open about their finances are a lot less likely to fight or stress over money situations if they are more aware of the financial situation. Family discussions are your opportunity to right the wrongs of the financial systems that your own parents used. Families that work together for the good of the family and maintain transparency and financial goals together are more likely to succeed, leaving a legacy behind for many generations.

Consider this: Cornelius Vanderbilt was one the richest men in the world at the height of his career. He was worth $105 million dollars in the 18th century. He would be a billionaire by today’s financial standards. However, he hoarded his knowledge of finances and kept much of his family in the dark about the stewardship of money. Many years after his passing, when his descendants finally gathered for a family reunion, not one millionaire remained between them.

Conversely, Mayer Amschel Rothschild was one of the wealthiest businessmen and a contemporary of Vanderbilt in the 19th century. He was also open with his family about financial matters and maintained a dialogue with his loved ones about financial goals. When he passed, he created a type of bank fund for his family, which allowed his heirs to use the money he left behind to accomplish their goals through a loan which they paid back into the fund for the next use. His family was very open and they would help each other with advice and direction when their ventures struggled. They also made it part of the deal to meet once a year to discuss their ventures. And guess what? They remain one of the most affluent families in banking to this day. They practiced stewardship of money and kept discussion lines open. You can apply the same financial tactics in your life.

Building A Legacy

If you are one of the many families that have had difficulty discussing finances in the past, it’s not too late to forge some new bonds and make some new memories in the process. Factum Financial can help you. We help families establish their goals for their finances and then help them build a system that gives them the power to accomplish those goals. Would you like to find out more? Contact a wealth strategist at Factum Financial today by dialing (480) 525-8180.

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Zachary Gray is the Content Writer and Editor for HJR Global and associated companies. Zachary lives and works in the Phoenix Valley and writes on a variety of topics.