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Family and finances: The money talk in your relationship, to ensure your and your family’s financial future as a woman and a mom (Is hiding money from your spouse wrong?)
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Family, Love, Partnership and Money
Managing family and money can be one of the most challenging—and rewarding—aspects of our lives. Whether you’re planning for a growing family, navigating financial discussions with your partner, or teaching your children about money, this guide will help you build a strong financial foundation.
First of all I need to tell you, that every family is different and the members also think differently about money. The money talk and having meaningful family conversations about money is not an easy topic, because there are a lot of feelings around money and financial stress. You may not be a materialistic person, but statistics show that one of the most common reasons for divorces is money or the lack of money.
“Your partner is the most valuable investment of your life. They are the one who gives value to your children with their values, they are the one who colors your hours when the children have already flown away, and you are left alone together.”
The Importance of Family Financial Plan
Understanding why family financial planning matters:
Creating financial security for your loved ones
Reducing stress and conflicts over money
Setting a positive example for future generations
Why is it that money in families causes problems? (Family and financial problems)
Many ladies have already approached me with complicated family and money stories, and it’s worth finding out after a while if the “blonde prince” has any debts, or if he’s blacklisted by banks, and because of this, you can’t even take out a loan for a family house, so you have to pay rent for years instead of a desired home purchase.
But what if you have no chance of getting your property anytime soon? In the case of the FIRE path, this can be intentional, as in this case, the price of the apartment can also be invested, and you don’t have to take out a loan and commit. I wouldn’t recommend this with a family with children, but it’s a fact that many people who have already achieved FIRE don’t own their apartment, or if they do, they rent it out and live in a more cost-effective rental.
If you get past the first financial arguments, then you’ll see who you’re dealing with and whether your financial value systems match. Yes, the financial value system! Please, savor this expression!
It’s worth testing a man to see how much he stands by you because if you don’t have savings and income during the baby-poop and maternity leave period, you’ll be largely financially dependent on this person. I see complaints daily in women’s groups that the man is not supportive financially while the baby is coming or already there. Some mothers would rather raise their children alone and flee wherever they can: to their parents, to a mother’s home, here or there. This doesn’t sound like a joyful period, but a nightmare!
IF you are not ready for that path, then it is time to read my book about money:
Don’t believe it? Then I’ll show you an example I recently read in a women’s group from an anonymous person:
“Hi everyone! A few days ago, we started going downhill pretty badly with my husband. We’re not doing well financially. My mother-in-law told me to pay more attention to her son and our money because this won’t be good. Long story short: Debt upon debt. There were things I didn’t know about our finances, only now as my mother-in-law told me. We’ve been on a joint account until now. I never looked at his mobile bank, I trusted him, believed him. At home, we always verbally discussed how much money we had left in the month, and how to budget it. Unfortunately, we live from month to month, but that’s not the point… after my mother-in-law called me last week… I told my husband that I wanted to see his account balance. By the way, he turns angry if I even touch his phone, so I don’t even look at it. Well, the answer was that he’d think about it. Finally, he said he’s not sharing with me so, he won’t even show me. I threw a tantrum here, asked for my card back from him, and declared that I wouldn’t be on a joint account with him like this, not knowing what’s going on there. It’s been 2-3 days since then, we haven’t even spoken to each other. Today he brought me chocolate and flowers, but I told him that’s not a solution to our financial problems. He’s 30, I don’t know why he is so immature and irresponsible as a dad. We have an almost 1-year-old daughter. I’m thinking of her too, I don’t want to be in a stressful financial situation. I’m sure he has some secret debts lent by friends, I just don’t understand why he doesn’t tell me. I might take his head off, but it would be better than not looking at each other for days and hiding finances as a couple… Until now, we had a joint account, and we went to fuel up together, and shopping together, I have no idea what he spent the money on, what he needed the money for, that he got himself so much trouble that I can’t know about? A few months ago he got a new job. I know he earns less now, but I think we could have discussed this too, and I even told him it’s okay, we’ll spend a little less now, but there will be better times, I’ll stand by him, but what is this? I don’t want to stand by him like this if he’s lying to me and keeping secrets. I have to think about our little girl too. What would you do in my place?”
From this example story, you can realize that this happens with females every day, and sometimes when it is already too late and they are mothers. That is why it is important to have your own money: savings and investments!
Budgeting for Families
If you just starting your money path as a family the first step is to creating a family budget that works:
What can you do as a family to get your finances together?
1. Track Family Expenses: Use apps or spreadsheets to monitor where money goes
2. Set Family Financial Goals: Involve all family members in setting short and long-term goals
3. Use the Envelope System: Allocate cash to different expense categories
4. Regular Family Budget Meetings: Discuss finances openly and regularly as a family
Emotionally blackmailed in family finances?
Marriage means an emotional and financial community. A commitment that means I don’t hit my husband in the face with a baker’s peel when he annoys me, but try to discuss problems with him and be an understanding partner on bad days. The same is true for men: not beating their wives and going to the pub instead. This can work for a while, but what if one day a person decides not to give money to force you into a job you don’t want, for example, or just emotionally blackmails you that you’re a nobody without them? (Family finances are complicated, aren’t they?)
I once heard from a woman that her husband took all her money because all maternity benefits were transferred to his account. He was wallowing in money like Uncle Scrooge, while the woman was living in poverty beside him, having to beg for every penny. “Do you want a new skirt, Mommy? Do something for it… like, be available 24 hours a day! Oh, you don’t feel like it after you’ve polished the apartment to a shine and taken care of the baby? Well then, forget about the skirt, the worn one will last for a while longer!” Such situations also occur!
Living together before marriage… Worth it from a financial perspective?
Every relationship is different, but it’s worth not looking for your complete opposite in personality and finances because that can lead to big quarrels. It’s true for both genders that if you’re conscious, life will be easier with such a partner. Not one, and not two women or men have complained to me that their husband or wife spends all the money, and they don’t want to live in such financial vulnerability. That’s why it’s worth living together before marriage and observing life situations such as who pays in the store, or how you’ve arranged this and that financially. I’ve heard of cases where the woman knew she had to pay in the store that day from her maternity allowance because the man walked past the cash register with his head down and started packing things as if nothing had happened, all completely unpredictably.
You can’t raise a child like this, because the money you get while you’re at home with the child is very finite! There was a case where, among my clients, the woman couldn’t tell after nearly a decade how much savings the person she was living with had, because she never asked, but the man knew her situation exactly.
Saving Strategies for Families
Building a secure financial future for your family:
1. Emergency Fund: Aim for 3-6 months of living expenses
2. Education Savings: Consider education savings accounts
3. Retirement Planning: Don’t neglect your own retirement while saving for your children
4. Family Vacations: Set up a dedicated savings account for family trips
What is separate property in marriage?
The woman seeks security, and stability in which to live and raise children. This is a genetic code for offspring rearing! Never hold this against her as a man!
What is separate property in marriage? It’s what you either write a contract about or inherit (But it changes from country and culture a lot, I am talking about some European standards now). I know not everyone agrees with me, especially on financial topics, but I don’t believe in prenuptial agreements, because if you don’t dare to be in a complete financial partnership with someone or to make money decisions together, it’s like you’re just signing up for a 5-year subscription on Netflix (but it is the European version, maybe if you make a great deal in a different continent it’s better for you). I would add that as a woman, one would come out much worse from such a divorce if they don’t work in the first 5-10 years of the relationship because they’re raising children. Also, marriage has no warranty period, I don’t consider it a “let’s try” thing, but a “we’ve decided” thing. This is a safety “gentlemen’s agreement” if we don’t make a contract. As I once heard from a psychologist: “Who loves, shares.”
I must also give space to the counter-narrative, namely that there are many divorces and some people don’t want to get married without a contract. We must get to know each other, develop ourselves and each other, and have common goals for which we take responsibility together, rather than making it the norm to secure ourselves with a prenuptial agreement, “and that’s that.”
Couples and Money
Navigating finances in relationships:
1. Open Communication: Regular, honest discussions about money
2. Joint vs. Separate Accounts: Decide on a system that works for both partners
3. Shared Financial Goals: Work together to set and achieve financial milestones
4. Respecting Different Money Styles: Understand and accommodate each other’s financial personalities
Transgenerational financial traumas
A lady during my interviews talked about transgenerational financial traumas:
“To the classic roles, I would mention the example brought from home. Growing up with parents who want to live larger than they can afford, as an adult, people continue this example even if their partner is more thoughtful. Developing this consciously is a challenge. When two people connect their lives so that one sees constant saving and is financially well-off as a fresh graduate, while the other grew up with the ‘you can’t take it to the grave’ mentality, it’s difficult from both sides. I’ll mention a few examples so you understand: for us, the 200 Dollar stroller wasn’t good enough, only the 1000 Dollar one, because I wanted to show that we could afford this too. Then of course we sold it for a pittance because it wasn’t good, and for the next child, we bought one for pennies from a second-hand site. By then I knew that the child didn’t sense any of this, in that I’m pushing them to the next street and back. Vacations were the same: I always wanted to try fancy things because my mom did this when I was a child. It was difficult for my husband, or he couldn’t convince me at all and rather gave in. It took time for him to explain that the value of our vacation isn’t given by how many hundred dollars we spend, or what super picture we take, but what experiences we gain together. This is a huge extra burden for a family man, and although he earns well, it will never be enough… Unfortunately, many marriages have broken down among our friends, which was greatly influenced by the lack of financial experience and the different perspectives brought from home.”
If you’re already married and don’t have a prenuptial agreement, don’t separate, and want to retire early together, then I recommend the following strategy, which has been proven internationally. Live on one salary and aggressively invest the other in individual stocks and ETFs (exchange-traded funds, you’ll find a detailed explanation in my other posts), or buy one or more investment properties, even with credit limit maximization, and pay the instalments from that until it pays off.
Teaching Kids About Money
Raising financially savvy children:
1. Age-Appropriate Money Lessons: Tailor financial education to your child’s age
2. Allowance Systems: Use allowances to teach budgeting and saving
3. Savings Jars: Help kids visualize saving with separate jars for spending, investing, saving, and giving
4. Involve Kids in Family Finances: Let them participate in budget discussions and grocery shopping
Laying the Foundation for Children’s Future
In today’s world, a young person can’t build a property worth hundreds of thousands of dollars from scratch without help. They can only achieve their housing goal through loans or progress very slowly on this path, brick by brick. While many countries offer support and favorable loan structures for first-time homebuyers, housing prices have generally adjusted to these incentives. (I would add that investment properties can be purchased not only in your home country, and there’s quite a lot of material about this in various financial education resources.) These numerous supports have driven up real estate market prices. We also need to see that what needs to be promised in exchange for loans and support comes at a price. It’s not easy to raise multiple children from the money perspective and I know many young people choose to stay child-free as a financial decision.
Generally, grandparents don’t have savings either, so it’s natural that they can’t support their children or grandchildren in starting life with property, vehicles, land, or other resources. In today’s world, for those living on average wages to set their children up in life, they may need to plan steps for decades to advance, and this can include a stock portfolio. This is designed for the long term, and we can invest in their future with as little as $10- $50 per month. I would include here government bonds or savings plans specifically designed for children, which are available in many countries.
In practice, this might look like opening a separate brokerage account with tax advantages (similar to an Individual Savings Account in the UK or a 529 plan in the US) where you can invest a monthly amount, or even sums intended as birthday or name day gifts, into individual stocks, ETFs, and then eventually hand this over to your child or help them achieve some life-starting goal with it. The foundations of this capital can be invested even before the child is born. In addition, if you manage to achieve larger investments on your FIRE path, then they can count on generational inheritances as well.
Insurance and Protection
Safeguarding your family’s financial future:
1. Life Insurance: Ensure your family is protected if something happens to you
2. Health Insurance: Understand your options and choose appropriate coverage
3. Disability Insurance: Protect your income in case of illness or injury
4. Estate Planning: Create a will and consider setting up trusts for your children
In these cases, I would recommend getting some form of life and disability insurance, especially if you’re taking out a loan for investment purposes on a property! I don’t recommend using loans for stock investments in any form! (Although I’ve heard several stories where young people cleverly invested their student loans, or found a place for government-backed family loans in investments.)
Challanging family finances
So, here you are as a couple, nicely managing your monthly expenses, discussing expenditures, and open to opening investment accounts in both your names. If there are children from previous relationships, and you don’t want to pass on the capital to your children while either of you is alive, you can specify this in your will. In these, you can clearly state that you’re leaving these accounts to each other. The will can, of course, be modified. In the case of real estate, reciprocal life interest is the winning strategy!
Additionally, the bank account where you keep more money must be a joint account. This is the only type of account that isn’t part of probate proceedings and automatically goes to the other account holder. I had a student whose account was joint with one of their parents instead of their spouse, and the parent decided to withdraw a lot of money without question. Because of this, it’s worth being cautious.
Cheat sheat
1. Life and Disability Insurance: This recommendation is universally applicable. In many countries, it’s considered essential to have these insurances when taking on significant financial commitments, especially mortgages or investment loans.
2. Investing Borrowed Money: The caution against using loans for stock investments is a widely accepted principle in personal finance across the globe. However, the practices of investing student loans or government-backed loans vary greatly depending on local laws and financial products available.
3. Joint Accounts and Estate Planning: The concept of joint accounts and their treatment in estate proceedings can vary by country. In many jurisdictions, joint accounts do indeed pass to the surviving account holder without going through probate, but it’s crucial to verify this with local laws.
4. Wills and Inheritance: The ability to specify inheritance wishes in a will is common in many countries, but the exact legal framework can differ. It’s always advisable to consult with a local legal professional when setting up or modifying a will.
5. Life Interest in Property: The concept of “life interest” or “right of occupancy” exists in various forms across different legal systems. It’s a useful tool for estate planning, but its implementation may vary.
6. Caution with Joint Accounts: The risk associated with joint accounts, especially with individuals other than a spouse, is a universal concern. Financial advisors worldwide often caution about the potential risks of joint accounts with parents or children.
Remember, while these principles are generally applicable, financial and legal systems can vary significantly between countries. It’s always advisable to consult with local financial and legal professionals to understand how these concepts apply in your specific jurisdiction.
Balancing Family Needs and Wants
Making smart spending decisions:
1. Prioritize Expenses: Focus on needs before wants
2. Teach Delayed Gratification: Help family members understand the value of waiting
3. Find Free Family Activities: Explore low-cost ways to spend quality time together
4. Involve Everyone in Cost-Cutting: Make saving a family effort
Handling Family Financial Challenges
Navigating difficult financial situations:
1. Job Loss: How to adjust your family budget during unemployment
2. Medical Emergencies: Planning for unexpected health costs
3. Debt Management: Strategies for paying off family debts
4. Caring for Aging Parents: Balancing your family’s needs with eldercare responsibilities
Building Generational Wealth
Creating a lasting financial legacy:
1. Invest for the Long Term: Teach your family about the power of compound interest
2. Real Estate: Consider property investments as a way to build family wealth
3. Family Businesses: Explore entrepreneurship as a way to create lasting value
4. Charitable Giving: Involve your family in philanthropy to teach about social responsibility
Secrets and agruments in family finances
People’s attitudes vary widely when it comes to sharing their investment activities with their immediate environment. My research before writing a financial book confirmed that half of the people enjoy support from their family, some interpreting this as creating security, while the other half actively keep secrets from their family. Those who keep secrets do so for various reasons.
It’s also hugely important to what extent the members of a couple think “jointly” in terms of earning money, spending, and managing the family budget. As a professional, I can only have an opinion, but I have no right to interfere in what works for whom and why they live the way they do. Of course, if one has a supportive environment that favors savings and investments and isn’t overspending, this path is much easier than if the person committed to investments is constantly faced with negative criticism.
Often, the living conditions of the family also matter, because if one party is dissatisfied with, let’s say, the housing conditions, while the other fully accepts it, a huge argument can develop due to financial factors, as different preferences will be in the first place. I’ve heard and seen when both parties are thinking in terms of investments, they define their boundaries in completely different assets and risk levels, which can also be serious grounds for arguments.
More than one couple has argued in front of me during my online classes due to their financial and investment disagreements. While men are bolder, women seek security! It also matters how indebted they are, or if there are already children in the picture. Not to mention if one member of the couple decides to pursue early retirement, while the other is an impulsive buyer, it can easily mean the end of the relationship due to incompatibility. After all, a person who aims to replace their daily work with their investments is not keen on going to restaurants every weekend to spend large sums. They would prefer a more frugal behavior.
Together, of course, it’s easier to achieve a greater degree of financial freedom, as I’ve already mentioned. Of course, you need to accumulate a larger amount, but two conscious people who are financially moving forward together towards the set goal can more easily take out a loan for an investment property, for example. Also, if one party’s motivation wanes, there’s the other financially conscious person in the relationship who reminds them why they want to break free from the rat race and what their really big plans for life are!
Later in life…
Let’s assume you grow old with your partner and live in a good relationship, jointly managing the pension, and bearing the burdens together. But let’s look at the other case, where your partner dies earlier, and you’re left alone. (I recently went to see a property, and the old lady was sobbing on my shoulder, whose perfectly healthy 67-year-old husband, with whom they still had plans, didn’t wake up one morning.)
Let’s say the children move abroad because they earn much less at home than they can elsewhere. So at most, your neighbor will visit you. And they will only speak to you if you didn’t fall out earlier when they were mowing the lawn for the umpteenth time at 6 am on a Sunday.
One income falls away, leaving the widow’s pension and your income, and if you didn’t earn a “top manager” salary during your working years, you can easily find yourself in a situation where after paying your bills, led by gas, you don’t have a penny left to live on.
It could have been different, you could go to the theater, to the spa with your friends, but because you didn’t take care of your retirement years in advance – you didn’t invest to live on passive income in your old age – your days will pass sitting in public healthcare, experiencing all kinds of illnesses in waiting rooms – if you can bus there – and in your remaining time you can look at the four walls at home, because, well, the TV subscription isn’t free either.
And I haven’t even talked about the fact that someone who is already advanced in age moves with more difficulty, it’s not so easy to get on the bus with aching joints. It’s good to have a car at home, you get in, roll to the clinic or the store, and you can solve your life independently. In such a situation, it’s a jackpot if you can afford the money for gas!
Cheat sheat
1. Investment Attitudes: The diversity in approaches to investment and financial transparency within families is a global phenomenon. Cultural factors can significantly influence these attitudes.
2. Couple Dynamics: Financial disagreements in relationships are universal. However, the specific manifestations (like restaurant spending vs. saving) may vary based on local customs and economic conditions.
3. Early Retirement: The concept of FIRE (Financial Independence, Retire Early) is gaining traction globally, but its feasibility and implementation can vary widely depending on local economic conditions, social security systems, and cultural norms.
4. Housing and Property Investment: While property investment is popular in many countries, the emphasis on it can vary. In some cultures, renting is more common and accepted than in others.
5. International Migration: The scenario of children moving abroad for better economic opportunities is a global phenomenon, particularly from developing to developed countries.
6. Healthcare and Aging: Concerns about healthcare costs and quality in old age are universal, but the specifics can vary greatly depending on each country’s healthcare system.
7. Pensions and Social Security: The reliability and sufficiency of government pensions differ significantly between countries, making personal financial planning for retirement crucial worldwide.
Your Family’s Financial Journey
Remember, building a strong financial foundation for your family is an ongoing process. It requires patience, communication, and consistent effort. By implementing these strategies and teaching your loved ones about smart money management, you’re not just securing your family’s financial future—you’re passing on valuable life skills that will benefit generations to come.
Every family’s financial journey is unique. Embrace your family’s individual goals and values as you work together towards financial security and success. With open communication, smart planning, and a commitment to financial education, you can create a bright financial future for your loved ones.
Managing finances when family and money mix can be a challenging yet crucial aspect of our lives. Throughout this discussion, we’ve explored why money is important in a family and how it affects family relationships. From couples planning their future together to dealing with relatives asking for money, financial matters often lie at the heart of family dynamics.
Many of us find ourselves constantly struggling with money, but it’s essential to remember that open communication can be the key to financial harmony. It may seem counterintuitive, but fighting about money with your family can be beneficial. These discussions, when conducted constructively, can lead to better financial decisions and stronger family bonds.
For those not sure how to have the “family and finances” talk, here are some tips for meaningful family conversations about money:
1. Be open and honest about your financial situation
2. Listen to each other’s perspectives without judgment
3. Set clear financial goals as a family
4. Discuss potential challenges and how to overcome them together
Discovering financially smart ways to raise a family, deal with relatives and money, and manage family businesses can significantly improve your financial well-being. Whether you’re planning for early retirement, investing in property, or simply trying to make ends meet, a healthy relationship with money starts at home.
Remember, every family’s financial journey is unique. What works for one may not work for another. The key is to find strategies that align with your family’s values, goals, and circumstances. By fostering open discussions about money, you can help your family develop a healthy relationship with finances that will serve them well throughout their lives.
In the end, managing family finances isn’t just about numbers on a spreadsheet. It’s about creating a secure future, teaching valuable life skills to the next generation, and strengthening the bonds that tie your family together. So don’t shy away from those financial conversations – embrace them as opportunities for growth, understanding, and family unity.
– Mastering Frugality: Your Guide to Saving Money Without Sacrificing Life Quality
– 10 Practical Ideas to Be Frugal (Without Getting Weird)
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