Wealth of Wisdom: Step 5 – discussing finances with the family

[FEATURED] Sticking to your financial plan may mean getting family members involved, especially if you have a partner and children. Ask everyone to get involved and start thinking about wealth as a family goal

Priya Naicker, Advice Manager at Old Mutual Personal Finance, suggests the following to help you start the conversation of finances with your family, as well as offers practical advice on how to teach your children to spend and save wisely.

WITH YOUR SPOUSE
As a couple, you’ll need to take each other’s financial needs into consideration, which is why it’s important to set aside time to talk about the following money matters.

1. Savings
Talk to your partner about your shared savings goals, such a deposit on your first home or a holiday. Also look at your longer-term savings goals, like starting a family, your children’s educational needs and your retirement.

2. Death and disability
It’s vital to have a conversation about making provisions in the event that something unexpected happens to you or your partner. Talk about death, disability and severe illness cover, and whether each of you is adequately prepared. Having this in place will result in reduced financial strain on the household if these events occur.

3. Medical aid
Speak to your spouse about your medical aid options, like whether you should join your spouses’ medical scheme as a dependant, or whether to shop around for a scheme that suits you both. Do your homework, and consult a professional financial adviser.

4. A will
Speak to your partner about how each of you want your respective estates to be divided in the event of one or both your deaths. There are important aspects, such as your marital regime, that affect your will. Your financial adviser can assist in drawing up a valid will and discussing the impact of your decisions.

WITH YOUR CHILDREN
Give your children the gift of money management skills from an early age. Here are some tips on how to teach your children good money habits:

  • Make talk about money a routine: One of the easiest ways to introduce children to the idea of spending and saving is to take them on your weekly trips to the grocery store. Let them know the budget you are working with, and ask them to help you find the best prices on the items you need.
  • Make it fun: Make it fun by giving them (or help them make) a piggy bank.
  • Use their pocket money to teach them how to budget: Pocket money is a practical way to prepare your child for when they earn income, and how to manage the amount at their disposal.
  • Earn and learn: Make the experience of earning and spending money real for your children. Help them create their own revenue (for example, by doing chores or creating mini business ventures), and guide them on how to make spending decisions.
  • Get them a bank account: When your children become more money savvy, open bank accounts for them. Teach them about interest, bank fees, and how to use their bank cards and ATMs safely. This will help them understand that spending money with a bank card is still spending real money.
  • Be a financial role model: When it comes to finances, live what you teach. Your children will follow your example.

For more valuable advice on how to create wealth and manage your finances to meet your goals, visit: www.getgreatadvice.co.za or come to one of our Old Mutual events for practical tips from financial experts.