FINANCIAL PLANNING SHOULD BE A FAMILY AFFAIR

WRITER: BONNIE CONRAD

Money is an important part of life, but many people are reluctant to discuss it. Recent surveys revealed most people would rather talk about religion, politics, and even death than have an honest talk about their finances.

The results of such reluctance to talk can be dire. In long-term marriages, one partner often takes charge of the family finances and the other spouse may know little about where they stand, how much money they have or how ready they are for retirement. That puts the nonplanning spouse at risk, especially if an untimely accident or illness takes the planner out of the picture.

While it may be uncomfortable, calling a family meeting to discuss finances is vital. If one spouse has taken charge of paying all the bills, that spouse should provide their partner with basic information, such as where receipts are kept, where old checks are located, and how expenses and payments are prioritized.

Going forward, both spouses should review bank statements, balance the checkbook, and review monthly bills. Two heads are better than one and the spouse who had previously been out of the loop might identify money-saving opportunities the other one missed.

Investment decisions should also be a family affair and involve both spouses. It is easy for one spouse to take charge here too, especially if that spouse is more comfortable with the stock market and mutual funds. Even in such cases, however, it is important to get the other spouse to buy in. Having both spouses on the same page will make monetary disagreements less likely and help head off future arguments.

Many parents leave their kids out of financial discussions, but that may not be a smart idea. While young children don’t need to know how much money their parents make, teenagers can and should be included in some discussions. At the very least, it will provide some context and help them understand the value of money and the importance of future planning.

Since few schools teach anything about managing finances, it is up to parents to provide those life lessons to their children. Sitting the kids down with you while you and your spouse are paying the bills can be a real eyeopener. Seeing the size of the cable TV and cell phone bills can give your kids a new appreciation for such luxuries. There is another important benefit of including the kids in your financial discussions. Many teenagers assume their parents will be paying college costs, and many parents plan to do just that. Financial planners, on the other hand, often recommend that parents save for their own retirements first and put college costs on the back burner. Every family needs to decide which strategy is best, and they need to share these thoughts with their soon-to-be collegebound kids.

It is not easy to talk about finances. Whether you are just scraping by or living comfortably on great salaries, talking about money will always be uncomfortable. Overcoming that discomfort can have long-term benefits for the entire family.