Financial decisions in traditional households are relatively straightforward. The “head of the family” or someone with an authoritative figure makes the decision and it is often understood as final. However, this could lead to problems, especially when the younger members are not prepared to make financial decisions when it’s already their turn to do so.
As parents near the age of retirement, the younger members of the family must already be involved in the management of household money. They need to be prepared and must also be heard so that as changes happen, finances will still be managed appropriately.
Tips for family financial planning
Get everyone involved.
Family members should be aware of the financial decisions that are usually made. From making small purchases to big investments, everyone should know the factors that must be assessed and considered. It is important for them to understand that there is a process involved in every decision made.
Getting their attention may not be easy, especially with “personalized entertainment” that can be accessed anytime. When discussing finances with family members, plan it well. Make sure that they will take a break from their phone and other devices. Plan short but meaningful conversations. For instance, when planning a business venture. Invite them to dinner to announce plans. This will allow them to focus and understand the importance of the matter.
Encourage open communication.
Sometimes money talks lead to arguments which is one of the reasons why in many settings this is discouraged. In families, members should be free to communicate. When there are different positions regarding finances, understand their point of view before persuading them to adopt actions. This may also be an opportunity to learn a different but valid perspective from another.
Personal experience is a good teacher. Family members should know that they are responsible for the results of their actions. If they are given a budget for a specific purpose, put them in charge. Let them use their money so that they can practice financial decision-making even on small things. Regardless of the consequences, it will be a lesson that they will remember when making bigger decisions.
Instill good financial habits.
Family influences the values of a person. It would be easier to make one capable of money management if good financial habits are instilled early. Teach them the importance of savings and budgeting, as well as how they affect the achievement of goals. Let them apply those values in their personal lives so that when the time comes when they must make big financial decisions, they will be capable.
When it comes to financial planning for the family, everyone should be aware that some actions don’t equate to instant results. There are financial decisions that must be made now to protect the family’s future. This may include decisions regarding properties, education, and investments. Emphasize their long-term implications and the importance of making timely and right choices.
Discuss insurance and investments openly.
The goal of financial planning for the family is to safeguard the future so that even when other family members are no longer around, a safety net is already built to keep everyone going and still have a comfortable life. This is how insurance and investments work.
Stress the importance of investing early to make the most of the benefits that they can get from their investments. Encourage them to study products that can help them achieve their life goals. Sun Life offers health protection, retirement plans, estate preservation, and other life insurance products that are suited for family members of all ages.
Be a good example.
Practice what you preach. Lead by example to encourage household members to be serious with financial planning for the family. Strive to be a good role model for them.
● Manage finances well.
● Be open to investment opportunities.
● Get insured.
● Save money.
● Talk to a financial advisor.
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In the Philippines where family ties are strong, making financial decisions as a family is important. Since everyone’s interest is often involved in the decisions made, family financial planning must have its place in discussions. In a conservative society, this may not be an easy task especially when views differ. However, there are steps that can be followed so that parents may retire without worries knowing that the younger generation can effectively manage the family’s finances.