Knowing how to talk to your family about money isn't as easy as you might think. Depending on how you approach the topic, you might be considered frugal or money-hungry.
Talking about finances can be a sour subject for many, including your family members. But, honesty is perhaps the essential ingredient for productive, unambiguous communication.
It can be difficult to discuss finances with your family, but if you are facing trouble, then you’ll want as much brainpower as possible on the task of keeping the ship afloat.
If you are adamantly managing your finances alone and feeling less and less in control of your financial future, the sooner you have a heart to heart with your family, the sooner you’ll be on the road to recovery.
We are going to go over some helpful tips to break the ice on family finances so you can effectively communicate, but also rid yourself of any unneeded financial stress!
Swallow Your Pride
Pride is counterproductive when it keeps you from disclosing your financial issues with your family. If your financial situation is dire, yet your family isn’t aware of it, the chances they act in a way that puts your financial situation in the ICU increases.
A Quick Example:
Let's say you are heavily in the red, yet your partner is not aware of just how bad the situation is. Without a proper understanding of your financial situation, they might act as if nothing is wrong and purchase something way out of bounds, given the reality of your situation. And who could blame them? In this scenario, you have kept your finances secret and played it off as if nothing was wrong.
Think of the mistrust this breeds when the truth comes out. If it is pride that keeps you from being honest about your financial situation with your family, you need first to be honest with yourself.
Are you afraid to seek financial advice? Do you think revealing financial distress is somehow correlated with moral weakness or another insecurity? Perhaps none of these questions apply to you directly, but it's worth thinking about why talking about financial issues honestly with friends and family can be so difficult.
✔ Related: Living Stingy – it isn't a bad thing!
Frame the Problem Correctly
The way you frame an issue helps to get everyone on the same page. First, you need to think about the problem correctly in your own head.
A Quick Look at Bankruptcy
Most financial difficulties are not the direct result of poor decision-making and reckless spending. Looking at US bankruptcy statistics can help to support this point. Only five percent of bankruptcies in the US are attributed to reckless spending. The majority of bankruptcies — 62% — are the result of overwhelming medical expenses.
Most financial difficulties are the result of a broken system in the United States. However, what is most insidious is that the average person is conditioned to believe that their financial hardship is solely the result of their own financial immaturity and recklessness.
A Quick Look at the Federal Minimum Wage
They fail to see that the minimum wage, which initially was intended to ensure that every worker had a livable wage, has not kept up with inflation. Last raised federally in 2009; it currently sits at $7.25 per hour. Some states have taken it upon themselves to raise the minimum wage in their jurisdictions, and federal employees will see wage increases to $15 an hour over the next few years, but in less progressive states, workers are stuck in 2009.
The bottom line here is that we’ve been conditioned to accept the game as fair when it really doesn’t operate on fairness. Understanding that it isn’t always the individual’s fault that they fall on hard economic times makes it easier to see the problem externally rather than internally.
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Make it a Family Effort
Frame your financial issues as a challenge to be overcome through a united family effort. Talk openly about the ways you can work together to overcome your financial hardship. Help your family understand they can succeed when they work together.
Invite Discussion, Opinion, and Opposition
You must be open-minded. Sometimes the best advice can come from the least likely of sources. Do not be afraid to ask for help, criticism, and advice from friends. It is possible that even your children can help you see the issue from a different perspective. Remaining humble will widen the scope of your perspective and allow other viewpoints to help inform you of the best path forward.
Seek Professional Financial Advice if Necessary
It might be best to consult with a financial advisor about your finances. If you are married, both you and your partner must be present for these discussions. Some consultations are free, and hiring one to help you develop a financial plan might be worth the money.
Also, consider consulting with an experienced bankruptcy lawyer to discuss a potential restructuring of your debts through chapter 13 bankruptcy. It is possible that bankruptcy might be the best path forward for you and your family. There are various chapters available to filers, and some are not as financially limiting as others.
Make a Clear Financial Goal and Stick to It
After thoroughly discussing your options with your family, friends, and professionals, you should be able to decide on a plan. Whatever that goal may be to remedy your financial distress, it is imperative that you stick to it!
When setting goals, it is crucial not to set them unrealistically high. Anything you decide on should be attainable and sustainable. Doing so is important when times get rougher, and it becomes harder to stick to your plan. If the goal is too high, it is all too easy to become overwhelmed by the challenge.
In summary, what is most important to take away from this post is that there are genuinely countless reasons why financial hardship befalls families who do not deserve to undergo it. Americans are conditioned to internalize the reasons for financial hardship as a moral and personal failing, but the statistics simply do not support this myth. Also, you must be open with your family members and friends to broaden your perspective.
Finally, don’t fear asking the professionals for their counsel and assistance, financial mentorship and guidance is always essential!
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎