You may have taken on the traditional role of managing money for your household, but that doesn’t necessarily mean that you don’t want everyone else to be involved as well. There are a few reasons that this is a smart approach to money management. A big one is so that if anything happens to you, even just being temporarily incapacitated, your spouse doesn’t suffer from the added stress of having to figure out the finances.
Another good reason is so that your children will get a good financial education. This is something that many people never receive, and it can have reverberations throughout their life. Finally, when you make finances into a family affair, it can bring everyone closer together. Some spending decisions, such as where to go on vacation, can become more collaborative, ensuring that everyone feels more a part of things. The tips below can help you accomplish this.
Have the Necessary Documents
Make sure that your spouse, at minimum, knows where to access passwords and information about all your assets and debts. You may be handling the money because it’s something your spouse largely has no interest in, which is fine, but they need to know enough to take over your role if necessary, including what bills need to be paid and when. If you’re not married, you may need to identify someone you can share this information with.
You might also want to look to whether you need additional documents, such as a financial power of attorney, to authorize someone to manage these accounts if you cannot. You should also consider estate planning, including a will that appoints someone to be guardian of your children. Think about whether you want to set up trusts for your children, which can help protect an inheritance for them until adulthood or even later.
Thinking About College
A big part of managing money within many families is figuring out how to pay for college. This might involve creating a fund that offers tax advantages for education savings. However, this is rarely enough to cover all the costs of tuition and living expenses, so parents may want to help their kids explore another avenue, including scholarships, federal aid, and private loans. One issue your child may run into regarding private loans is needing a cosigner.
This is often necessary because students don’t have the credit history that lenders require. In fact, other young adults you know, either relatives or family friends, may find themselves in a similar situation and ask you to cosign for them. Your first instinct may be to say yes immediately because you want to help, but it’s important to know what you’re getting into, such as does cosigning a student loan affect credit? You should consider this and several other questions before agreeing.
Getting on the Same Page
You and your partner should try to get on the same page about money, and this means talking about it, its role in your life, what it meant to your own parents when you were growing up, and what values you want to pass down to your children. This might mean compromising on some issues. It could mean having some difficult conversations, perhaps even seeing a counselor for a few sessions as you work through some of your attitudes about money. It’s not unusual for this to be a fraught issue for couples, to the point that conflicts over it can often end relationships, so dealing with this now rather than when it becomes a point of contention is not a bad idea.
Teaching Your Children
There are many ways that you can teach your children about the role of money in your life depending on their age. When they are young, they can help collect coupons and save up their allowance. As they move into their teens, you can pay them for jobs around the house or help them find part-time work and open a bank account. Even younger kids can participate in discussions about family time and vacations. Looking at their different options on a budget can give them a visceral sense of how they might have to balance the length or activities of the vacation with how much there is to spend.
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