Model financial partnership for your kids

Give your kids a head start and help them take control of their finances earlier.

You have taken the PlanSingle philosophy to heart. You’re working hard to make sure that you are in good financial condition and are well informed and will remain that way regardless of what twists and turns life has in store. And you want your kids to have the same security.

Show your children how to be a good, active financial partner by doing some of the work with your spouse in their presence.

Orienting the next generation is important. According to a study by UBS[1], 61% of millennial women leave major financial decisions to their spouse (compared with 54% of Baby Boomer women) but 50% believe they should be doing more to better manage their finances (compared with 22% of Boomers). Millennial women have more ground to cover in becoming full financial partners than their parents.

What can you do to help? One strategy is to model the behavior you hope to encourage. Show your children how to be a good, active financial partner by doing some of the work with your spouse in their presence. Here are a few examples:

Talk about your next big purchasing decision, like choosing which car to buy, in front of them. Discuss some of the issues like price range and financing options as a family. Over dinner, perhaps. Show them how you compare different models and options. Evaluate buying a new car with an extremely attractive financing plan from the manufacturer against spending less for a used car that you will have to pay market rates to finance. Walk them through the calculations of how a price translates into a monthly payment. And talk about what kind of monthly payment would fit into your budget. Most important, show how you work with your partner to make the decision.

Better yet, involve them in a significant purchase, like buying an appliance or planning a vacation. Get their input on what they would like to see in a new refrigerator or what kind of trip they would like to go on. Then introduce how much you have been able to save toward that goal. Let everyone participate in suggesting trade-offs.

Work through some disagreements in front of the kids. If you want a new refrigerator and your spouse wants a new lawnmower and you know you can’t afford both, discuss how you will come to a decision where the kids can hear you. If the children are older, you could even discuss the mix of investments in your retirement accounts. You can leave the dollar balances out of the conversation and just talk about specific investments or proportions of the account. This can be especially useful if mutual agreement is important and you have different perceptions of risk.

Periodically let mom pick up the tab when the family goes to a restaurant. Chivalry (and possibly a difference in incomes) will often lead to dad paying the bill when the family goes out. Demonstrate that mom has some control over the family finances and her own resources.

Women often delegate family finances to men because of ingrained gender roles they learned when they were young. Even if you are perfectly happy letting the man take the responsibility for many of the financial tasks, demonstrate that the woman is capable and involved by periodically handling some financial activities together in front of the kids. Who knows, you may initially do this as a way to teach your kids and find that it helps make for a more effective partnership even when they are not watching.

 

[1] Own Your Worth, How Women Can Break the Cycle of Abdication and Take Control of Their Wealth, UBS, 2018

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