10 Money Conversations You Must Have With Your Family

by Ashley Jacobs on 26 March 2014 (5 comments)

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Discussing finances with your family can be difficult. Many of us associate feelings of shame or guilt with money — or in some cases, we were raised thinking that we shouldn’t share details of our financial lives at all. But having open, reasonable discussions about money is one of the most important things a family can do.

Not sure what money conversations you should be having with your family? Here are 10 to get you started.

1. The Budget Conversation

Every month, sit down with your spouse, evaluate your budget, and consider whether any updates need to be made. Has your income increased or decreased? Have your expenses gone up, or have you been able to lower them? Are you spending more than you earn and need to cut back? Discuss and adjust accordingly. If you have kids, it can be good to include them in this conversation, so they understand how budgeting works.

2. The Saving Conversation

Once you’ve looked over your budget, spend some time with your spouse and kids identifying ways to save more. Brainstorm ways you all can cut costs, such as using coupons at the grocery store, replacing cable with a basic Netflix or Hulu subscription, switching to energy efficient appliances, or using Skype Credit to make calls to mobile and landline phones at low rates. Include your kids in the conversation and make saving money into a game. Write down all their ideas, post the list on the refrigerator, and tally up how much money they’ve saved the family each month. Put a gold star next to the best money-saving ideas on the list. Set savings goals for the family and celebrate reaching those goals with an ice cream party at the end of the year!

3. The Financial Emergency Conversation

Are you able to foot the mechanic bill if your car breaks down? What happens if you or your spouse become unemployed? Emergencies happen, and it is vital to have the funds to be able to pay for them — otherwise these emergencies could throw you deep into debt. Discuss whether or not you have enough savings to cover expenses that could arise if a financial emergency came up. Ideally, you should have enough saved to cover three months’ worth of expenses, but aim for six months or more if possible.

4. The Retirement Conversation

Retirement may feel like a long way off, but it is essential to start preparing for it now for one reason: compound interest. With compound interest, the interest from your initial investment earns interest, and so on, which means that the sooner you start saving, the more money you will have when you finally retire. Also discuss with your spouse what your ideal retirement looks like. How much money do you think you’ll need? Where will you want to live? What sort of lifestyle do you want to have? Make sure you are both on the same page and working towards the same goals.


5. The College Conversation

If you have kids, you should start thinking about how (or if) you will foot some or all of the bill for them to go to college. If you do want to pay for their college education, consider opening a 529 plan or another savings account for them early. Another way to help save money for college is to encourage family members to contribute to savings accounts for your child as opposed to giving physical gifts when your kids are young and don’t grasp birthdays or holidays.

Also, if your child is in high school, include him or her in your college planning discussions. Encourage him or her to join clubs or sports teams and get the best grades possible to increase his or her chances of getting a scholarship.

6. The Goals Conversation

Have you and your spouse talked about if you want to buy a house? What about a new car? Do you both want to travel to a foreign country? It is important to identify shared financial goals with your spouse and talk about how you plan on achieving those goals. If you have kids, include them in the discussion when it comes to the fun goals, such as going on a trip. By including them in these conversations, you can teach your kids how to set goals and create a process to achieving them.

7. The Debt Conversation

If you are in debt, make sure you and your spouse have a solid plan for how to become debt-free. Write down all the debts you have and share them, so you both are aware of what needs to be paid off. Check in with each other monthly to see how you are progressing towards eliminating your debt, and discuss ways you can reduce debt faster, such as taking on an extra job or cutting back on spending.

8. The Credit Score Conversation

Good credit is important, especially if your family is thinking about buying a house. The better your credit score, the lower the interest rate on your mortgage. When you talk to your partner about credit scores, be 100% transparent about your credit history. If one of you has bad credit, identify ways to improve your credit scores together.

Also, make sure to check your credit report regularly. There are three major credit reporting bureaus, and you can get one report free from each once a year — which means you can check your credit report for free once every four months. Go through your reports together, and make sure there are no errors.

9. The Insurance Conversation

Take a look with your spouse at life insurance, health insurance, auto insurance, homeowner or renter’s insurance, and any other policies you have. Make sure your coverage encompasses everything you need, and that you are getting the best rates you can.

10. The Death Conversation

This is a difficult conversation to have, but it’s an important one — it determines how your family will be cared for and protected if the worst happens to you. If you both pass away, who will take care of the kids? Who will make health care decisions for you if you are unable to make decisions on your own? Making both a regular will and a living will should be part of this process.

What money conversations do you think families should have? Share your thoughts with us in the comment section!

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Guest's picture
Judith Barbuto

Nice job, Ashley. We've talked about them all, repeatedly, for all the changing circumstances of our lives. Thanks for making it so clear.

Guest's picture

Though I haven’t done Financial Emergency conversation with my family yet but I have definitely discussed about Savings and Budget – the two main aspects of financial prudence I believe. However, the last point in this blog post – ‘The Death Conversation’ – did look weird but is definitely too practical. I doubt anyone does this. However, the all the points written here are definitely very practical. Thanks for this well written blog post.

Guest's picture

I've had this death conversation with my daughter. So that she would know what insurance I have and who that's with, what income I have, what investments I have so that she can deal with my estate. It's important for them to know.

Guest's picture

The gold is money, everything else is credit conversation.

Guest's picture

Thanks for an excellent read. I agree there are important things that must be discussed with the family and money matters should be on your list. It would be difficult to deal with money troubles especially if you failed to plan and anticipate the results that it can bring.