Prior to our financial meltdown, my wife and I simply never sat down and talked about our finances. Right after our meltdown, we talked about things almost every day, but through our recovery, our discussions have slowly reduced themselves to the point where we’re effectively already having monthly family financial meetings.
And these meetings have become a big part of the financial glue of our marriage.
These conversations keep us on the same financial page and ensure that we both are open and clear about our goals, our dreams, our mistakes, our challenges, and our shared path in life. They let us constantly be a check against one another, making sure we both stick to our better behaviors and use each other as an inspiration for making good choices. If you’re in a long-term relationship with someone, I can’t possibly recommend a monthly financial meeting more highly.
What Our Meetings Look Like
Our meetings are really pretty simple. We go through any credit card statements and bill statements that we have, talk about any changes we should make, plan for anything that’s coming up, and set some goals for the next month, mostly along the lines of limiting unnecessary spending and deciding where our budget leftovers will go for the next month.
For the most part, we don’t need any sort of specific agenda or meeting time - we just do it every once in a while on roughly a monthly schedule. Some keys:
Everything is an open book. There should be absolutely no secrets in such a meeting. If your spouse wants to know about a specific spending choice, be completely open about it, not defensive. If you’re getting defensive, that means you have something to hide - and that means there’s a problem that needs to be addressed together.
Make goals a big part of the meeting. Not only big, long-term goals, but the shorter goals over the next month that will help you get there. Set goals together, even if the goals are very individual in nature. Then, throughout the month, offer each other encouragement. It’s hard to break a bad spending habit or to make new financial choices - use the motivation of goals and the constant encouragement of a loving partner to make the changes easier.
This is a great time to work on a simple budget together. Sit down and talk in detail about your spending plan for the coming month - and also where your challenges and successes were over the last month. This discussion can provide a lot of insight into where you’re going - and where you’ve been - and that information together can help you to make better financial choices.
Love and respect each other, even if you have differences of opinion. Money brings about strong feelings - don’t let these strong feelings overshadow the more important things in life. One good way to do this is to hold your partner’s hand during the meeting.
Involving the Kids
I am a big advocate of involving children in these meetings as early as possible, by age seven at the latest. Allow them to bring their own financial picture to the table - pay them an allowance, have them budget the money, and have them talk about their own successes. Here are some thoughts on how to incorporate kids into this picture.
Keep the open book philosophy. Everything should still be wide open so that your kids can see the financial reality of being adults. They need to know how much you’re spending each month to keep the roof over their head and the food on the table - as well as giving an idea of all of the little expenses that eat away at the big pile of money.
What about privacy? Many parents like to hide behind a veil of privacy, saying that it’s none of their children’s business how they spend their money. My argument against that is twofold: first, it makes a great educational opportunity for your kids impossible and second, it says that there’s something in your spending that you’re ashamed of. If there’s shame, that means that there’s something you personally need to improve in your life.
Naturally, I see no problem eliminating a few items with black highlighter in order to hide an upcoming gift or something, but if you’re sealing away most of your spending from your children, they’re missing out on a big learning opportunity.
Let them offer input towards goals - and have them set their own. When you’re making large financial choices, let them have a voice in the decision, but don’t let them run the show, either. Where you should allow them a lot of control is in setting their own goals, both over the long term and over the next month. Help them identify good things to save for and encourage them to work towards those goals. This goes hand in hand with the idea of splitting an allowance into pieces for spending now, sharing with others, and saving for later - in effect, budgeting for kids.
Make some of the economic choices you have available to them. This is a concept heavily advocated by David Owen’s excellent book The First National Bank of Dad. In it, Owen advocates that you should create a “virtual” bank for your kids with a very high interest rate - say, 5% a month - to teach them the value of saving very early. In other words, let’s say they have $20. They have the choice of putting that $20 in the “First National Bank of Dad” where it will earn $1 in interest every month, or they can spend it immediately. All they have to do to earn that $1 each month is simply not spend it. It’s a real choice for a young child and it introduces them to the dilemma of saving versus spending - and offers plenty of encouragement to make the “good” choice.
In The End…
At its core, the idea of a monthly money meeting is really all about communication. The more we talk about money with our family and the more we encourage each other to make good choices, the more likely we are to make good choices over the long haul. Even better, it’s a splendid opportunity to use ourselves as examples for our children, teaching them how to be financially responsible adults.
The Simple Dollar chronicles a man's road to recovery from "total financial meltdown." As author Trent Hamm puts it, "The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two." We'll post a couple of entries a week, but you can check out his writing daily at www.thesimpledollar.com