The words “family” and “budget” are not often seen together. As parents, you may have questions about how much you should get your children involved in family finances. Otherwise, it’s hard to expect your kids to grow up to understand the real world of money.
Budgeting is not an area of life that needs to be hidden. Why should it be? You would never be able to function in a business in which you didn’t have a least a good grasp of the budget and how you fit in with the total package. And, believe it or not, a family is a much closer unit than a business.
In a time when people seem to have no compunction about going on social media and discussing what used to be considered the most embarrassing and personal details of their lives, we still shrink in horror when addressing anything about our financial lives. “That’s too personal.” “That’s private.” “That’s nobody’s business; it’s between me and my family.”
And, frequently, the topic of money is even taboo within the family.
The secret of money in the family
Why don’t we discuss money with our children? There seem to be a variety of reasons. We may want to protect our children from “growing up too fast,” having to learn about the harsh financial realities of life. Sometimes we don’t want our children to know how little we make because we’re afraid they’ll think less of us. We may consider what we earn as life’s report card, and we may be getting failing grades in their eyes, as compared to others. Or, other times, we don’t want our children to know how much we make because we’re afraid they’ll want us to buy them more.
Whatever the reason we don’t want to talk about money, it seems as if we’re taught not to; money is just something nice people don’t talk about.
Bringing the family together on budgeting
Working out a budget should be a family project. The activity of paying bills and planning purchases will bring the family together in meaningful ways. It gives your kids a sense of the value of things, and of the very real problems of making ends meet. Budgeting also shows them what decisions need to be made in real life. The following activities will give your children a share of and a stake in family responsibility.
There’s no reason why, when your kids get to be 11 or 12 years old, they can’t be included in the family bill-paying project. If the family sits down and pays its bill together, it creates a real awareness of how a family works, how money works and how real choices are made. You can gather around the kitchen table with a pencil and paper or around the computer, using software. The most important aspect is that you’re working on a budget as a family.
First, the kids need to understand your net and gross income. Show them your paycheck and the different taxes that are paid. Then, with the remaining money, you have to make choices. Make a list of all the fixed expenses, such as the mortgage or rent. Other items on the list may include car payment(s), health insurance, retirement and college savings and utilities. After you’ve deducted these items, variable expenses such as household items, gifts, and vacations are up for debate.
Your upcoming vacation is a fantastic budgeting project, which should include the whole family. The conversation shouldn’t just be limited to “where do you want to go?” Discuss every aspect of your vacation expenses and the value received for your vacation dollars.
How much of the vacation budget will be spent getting there? Will a specialized wardrobe or equipment be needed for the vacation? This can open up a detailed conversation within the family of different kinds of value. What will the family be getting in return for its vacation dollars? Will there be more than one dimension to the trip? Will it be educational?
List every aspect of your vacation and the cost associated with each piece.
Getting the whole family involved in planning, budgeting and choosing a large purchase may seem like making more work for yourself, rather than less. On a certain level, it would be quicker and easier to go online, conduct the research and eventually buy that new refrigerator or car without any input; however, consider the valuable lesson you can teach your children.
Bring together the family to talk about the purchase and whether you need it. Then, turn the conversation into a budgeting exercise. They have to know your families’ needs and research all the purchase options, price ranges, maintenance costs and energy savings, among other considerations.
By the way: Not every decision about a major purchase has to be put to a democratic vote. Let your children know that you are asking for their input and their involvement, but the final decision will still be up to you and your spouse or partner.
Families can and should research charities the same way they research products. Your family should also make a concerted effort to plan how much money you can allow for the charities you choose. (And, factor in some time you may want to put towards volunteering.) Charity is an important part of your family’s self identity as well as its responsibility to the community and the world.
When you are doing these budgeting exercises with your family, you should bear in mind the words of Jacob Lew, the 76th U.S. Secretary of the Treasury; “The budget is not just a collection of numbers, but an expression of our values and aspirations.”