The Four Principles For A Successful Family Financial Meeting:

The Get Ready Financial Calendar action item for June is holding a family financial meeting. The goal of a family financial meeting is to review and communicate goals, priorities and intentions. Here are the four principles for a successful family financial meeting

  1. Include all family members.  It’s important to involve all members of the family as they are all stakeholders in your financial life. Including all of your family members allows everyone to communicate about all areas including goals such as college savings, cash flow, insurance, investment strategy and final wishes.  This also helps get buy-in from everyone which can reduce resentment. Family financial planning is a great way for kids to become financially literate.  While young children may not able to participate in all areas, they can always learn and contribute when they are comfortable.  Involving your children in cash flow discussions will help them understand why there may not be a trip to Disney World every year and will ultimately help them manage their own cash flow when they are adults.  College planning is an excellent topic for teenagers (and younger children) to be involved in. If your child will need student loans for which they will be responsible, they should have a say in that. Knowing what their potential debt load will be and how that will impact their future cash flow may help them decide on what college to attend.  
  2. Prioritize goals. Families can start on prioritizing these goals by treating it like a business plan. Essentially running a family’s finances is running a small business.  First, you have to assess your current situation. This includes organizing and documenting all of your assets and liabilities. Going through the organization process can help you create a cash flow statement (budget), net worth statement and a retirement tracker.  Some priorities may take precedence as they have a deadline (examples: paying your mortgage or renewing your health insurance), while others allow you more time such as adjusting your retirement savings. Start off with what needs to be done now.
  3. Review cash flow. It's important that everyone has the opportunity to communicate what their priorities, goals and objectives are.  Once those are all out on the table, a good next step is to take a look at fixed expenses – those that happen no matter what such as mortgage payments, food, clothing, utilities, insurance premiums and so forth.  Be sure to include expenses that are needed to fund a specific goal such as retirement savings and college saving.  Assess your household’s total income and how that compares to the “no matter what” expenses.  You have two choices, create more income or reduce expenses.  If income is fixed and you know what your necessary expenses are, you can start to add up optional expenses such as vacations, new car and so forth.  If the whole family is aware of what is available for these discretionary uses, and that funds are limited, it can save lot of back and forth and/or hard feelings.
  4. Plan for ongoing reviews. Your family financial plan should be reviewed on a regular basis.  Flexibility is key as the only thing certain about life is change. Adjustments can be made as needed. For example, you may want to have a financial meeting with your spouse prior to an employer’s open enrollment period.  

It’s also important for parents and adult children to have family financial meetings to discuss the transition of someone “stepping in” to a parent’s financial life. I’ll cover this next week.

Next Step: Schedule Your Family Financial Meeting

Resources: Access your Get Ready Toolkit (here) or register for free (here). The Get Ready Toolkit includes downloadable PDF versions of all of the worksheets from Get Ready including a cash flow statement (budget), net worth statement and retirement tracker. 

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