Money Crashers » Family and Relationships

How To Talk To Your Parents About Managing Their Money

Erik Folgate — Wed, 07 Oct 2009 04:59:31 +0000

Dave Ramsey has a saying called the “powdered butt” syndrome, which means that your parents have a hard time taking advice from you, especially financial advice, because they were once powdering your butt as a baby. Some parents have a hard time taking criticism or advice from their children, because they don’t want to think that their kids have more wisdom or knowledge than them. Some of you have parents who were great at teaching you how to handle money, and their finances are in great shape. But, the rest of you have parents that have no concept of managing money. They have no retirement saved, and you find yourself wondering what will happen to them when they are unable to work. Move in with you? Wow, that’s a scary thought. So, what can you do to overcome the “powdered butt” syndrome?

Let Them Approach You

Instead of jumping down their throat and telling them everything they are doing wrong with their money, let it be their idea to approach you for advice. Set an example by managing your money correctly and make subtle gestures about what you are doing with your money and how you are saving for retirement.

Buy Them a Money Management Book

There are plenty of financial management books out there, so pick your favorite and give it to them as a gift. They might scoff at you, but ask them to read it as a nice gesture for you taking the time to buy the book for them.

Ask Your Spouse To Talk To Them

This all depends on how strong the relationship is between your spouse and your parents. It also depends on your spouses willingness to get involved in the situation. I’ve found that often times a mother and her daughter-in-law can form a strong bond, especially if she never had a daughter. This could also apply to a father and son-in-law if they bond from the beginning.

Approach Them With Love

We all have a natural tendency to be defensive when someone approaches us about a sensitive issue without tact. Talking over a meal can sometimes ease the tension. Cook dinner for them if they live locally or the next time they visit, and tell them you are concerned with their future. If you do it out of love instead of selfish reasons, they’ll notice that.

Parents, do you have any other suggestions? How would you like your kids to approach you about money management? Has anyone gone through this with their parents in the past? Let us know! Related Posts:

How To Talk To Your Parents About Managing Their Money is a post from: Money Crashers

Save Money On Baby Sitting and Save Your Marriage

Erik Folgate — Wed, 21 Jan 2009 17:48:04 +0000

Many of us are cutting back on things that are not necessary to spend money on, and entertainment is one of life’s little luxuries that we tend to cut back on during tough economic times. However, there are a ton of date nights you can do with your spouse, and I will have a list of my ideas for tomorrow’s post. One reason many married couples with kids cut back on entertainment is because of the cost of babysitting. Young teenage girls aren’t cheap anymore. The days of paying them $5 an hour are gone. they want $8 to $10 an hour. If you’re gone for 4 hours, that’s a huge chunk of change to add on to your night out. Here’s a way to completely eliminate the cost of babysitting.

Create a Babysitting Co-Op Group

Find a group of couples ranging from 5 to 15 couples that would be interested in joining the group.
Hold an informational meeting explaining how the group will work and what information you need from each couple.
Assign tasks to a stay-at-home mom or someone with a little extra time on their hands to keep records for each spouse. Information you want to gather are emergency contact numbers, names of child’s doctor, special instructions for the children, etc.
Make a list of operating rules. Set a list of rules about how the babysitting will work so every member knows what to expect. For example, will you drop off your child or will the couple come to your house to babysit?
Start a free blog at Blogger.com and give full access to each couple to post updates and information and requests for babysitting. This is a great thing to have, because it leaves a paper trail for babysitting requests and open dates for babysitting.

Why This Works

Everyone is pitching in to help each other out, and if you find couples with kids a similar age to yours, you won’t have to do much babysitting, because they’ll just play together most of the time. If you feel like your marriage has been a little off lately, it’s because you haven’t spent quality time with your spouse. Setting a date night once a month is essential to a healthy marriage. You must get out of the house and away from the kids sometimes. Your kids are not your world. Your priority is to be a good husband or wife first, and THEN a good mother or father. Many people flip-flop these priorities and marriages begin to fail.

By the way, this co-op group also works for pet sitting. We have a dog, and we always dread the money we need to spend boarding our dog when we go on vacation. So, give it a try. I think you’ll find that everyone benefits from a group like this. Related Posts:

Save Money On Baby Sitting and Save Your Marriage is a post from: Money Crashers

Richard Branson Makes It Easier To Borrow Money From Your Family

Erik Folgate — Sat, 06 Sep 2008 02:03:21 +0000

Instead of sending the average joe to the moon, Richard Branson started taking on a much less glamorous endeavor. One of his many Virgin offshoots called Virgin Money, has put together a peer-to-peer lending system for families. You can visit the site here.

The products they offer are mortgages, business loans, student loans, and personal loans. Branson uses tactics to sell the product by encouraging you to “keep the wealth in the family”, and he promises better interest rates, because your friend or family member sets the interest, not some corporate bank. Sounds like a pretty good deal, right?

I think this is a horrible idea, and I don’t think Branson thought this one through. It’s a good idea to make lending from a friend or family member more formal, but that’s exactly why I hate the idea. Just the simple fact of borrowing money from a loved one flaws the relationship, but now that Virgin turns your friend or family member into a full-fledged bank, that’s a bad thing. I’ve never advised anyone to borrow money from their parents, grandparents, friends, or siblings. The reason is that it makes it so much harder to sit down for Thanksgiving dinner or hang out with that friend, when you know that you owe him or her money. Mixing business with pleasure never ends up positive, because a family or friend relationship should never be treated like a business. The moment that you start treating it like a business is the moment that the relationship becomes flawed.

Frankly, I’m not sure how Richard Branson became a billionaire, but he’s the billionaire, and I’m not, so he obviously knows what he’s doing as a businessman. Recently, everything he’s started has failed, and I think this endeavor will fail as well. I understand the other side of this argument. Some people have a hard time borrowing money from traditional sources, and family or friends can help someone out of a bind who needs the money. But, there are very few situations where the need to borrow money is a life or death situation. Borrowing from someone you have an intimate relationship with should be the last resort. Related Posts:

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Lying About Money Is Breaking Up Marriages

Erik Folgate — Thu, 24 Apr 2008 03:56:02 +0000

Here is an interesting article from MSN.com about financial infidelity and how it is affecting marriages.

It is no secret. Money problems is the number one cause of divorce in America. Whether it’s the lack of it, lying about it, or abusing it, money will destroy families and marriages if it’s not handled properly. This article talks about how lying to your spouse about your spending habits is starting to have a more profound affect on marriages. Little white lies start snowballing into larger lies about money, and before you know it, your spouse is oblivious to the fact that you’re pissing away all of your savings.

Here are some major causes of financial infidelity:

Online Gambling: this is growing and gamblers don’t even have to get out of their pajamas to get their fix.
Shop-aholics: This isn’t just women. Plenty of men suffer from this phenomenon. People actuall find comfort in buying stuff. If a new television, pair of shoes, or fishing equipment makes you feel better than the companionship of your spouse, then you have a problem.
Drug Abusers: Obviously, if you’re doing drugs, you’re going to spend money without letting your spouse know about it. In suburbia, more housewives and white-collar workers are getting addicted to prescription drugs.

Do you have a spouse with spending problems? Do they constantly lie to you about their spending habits? Do you have a problem with being honest to your spouse about money and spending? Seek out a marriage counselor in your area. The best solution is to confront your spouse about the problem. Do it in a loving way. Don’t attack them. Money issues can be devastating, but they don’t have to be a deal breaker for a marriage. You can save the marriage, but it starts with getting help.

Marriage And Money: Approaching Your Spouse About Their Spending Habits

Erik Folgate — Mon, 03 Mar 2008 12:06:59 +0000

One of the best things about my wife is that I never have to worry about her going crazy with the debit card and recklessly spending money. It never crosses my mind that she is going to use a credit card (she doesn’t have any) or use our debit card on a large purchase without discussing it with me first. However, some people are not so fortunate to have a spouse like this. Some of you out there constantly worry that your spouse is going to be careless with your money. So, what do you do? By the way, these discussions don’t just apply to marriages, they can also apply to dating relationships for those that are living together. But, most people don’t combine their money until they get married. I don’t have all the answers when it comes to marriage, but here is how I would approach the situation.

Confront your partner in love

The key point here is doing it out of love, not out of anger or resentment. It might anger the hell out of you that your spouse bounced the checking account again, but coming at them with fire and brimstone will only make the matter worse. If you are angry about something, wait to confront them about it until you have cooled off. Then, calmly sit down with them and ask them what you can do as a couple to sort out the situation. Outline your concerns, why they need to stop their spending habits, and how it makes you feel when they spend large amounts of money without discussing it with you.

Get their perspective of the situation

The best way to understand a situation and try to devise a solution to the problem is by getting the other person’s perspective on the situation. Try to find out why they spend the way that they do. If they come off defensively or try to push the problem off to you, then let them know that you are less concerned with blaming them with anything and more concerned with figuring out how to solve the problem. If they don’t think there is a problem, show them how their spending is ruining your monthly budget. Once you can get them to openly admit that they have a spending problem, that is when you can start to find a solution. It may not even be that person makes large purchases, but that they go out to eat constantly or buy little luxuries too often.

Define where the problem lies

Is it big purchases that are killing the budget or is it frequent little indulgences that are killing the budget? Show your spouse where the problem lies, and he or she may get a better understanding of what is going on. He or she might not even realize that going to Starbucks every morning and eating at Panera Bread for lunch every day is an extra $100 a week.

Devise a solution to the problem

Once you’ve figured out where the problem lies, don’t just talk about it. Try to figure out how you can help your spouse change their habit. Maybe you could put a little note on their debit or credit card that says, “Should you call me first?” That may sound a little weird, but it might get them to think about a purchase first if it’s large purchases that they have a problem with. If it’s the little indulgences they struggle with, then it might just be a matter of getting them to pack a lunch, make coffee at home, or just a matter of budgeting out the indulgences they want. I am a firm believer that you shouldn’t have to get rid of the smaller indulgences in your life to win with money. The “latte” factor is nice to think about, that $4 a day can turn into a $1 million dollars someday, but the fact is that you can still save to be a millionaire while still enjoying some of the little things in life. You can do this by budgeting out your indulgences. Give yourself and your spouse some “blow” money for the month. This is money that you can do whatever you want with without having to worry about what you are spending it on. My wife and I get about $80 to $100 each per month. If I use all of it in the first week, I don’t get Chick-Fil-A the rest of the month or any more iTunes downloads. This is a great way to budget out some money that you can use on life’s little indulgences without getting scrutinized by your spouse about what you spent money on.

If any of you have any other insight about this topic, please feel free to leave a comment or discuss it with me by Contacting Me Related Posts:

Marriage And Money: Approaching Your Spouse About Their Spending Habits is a post from: Money Crashers

Four Tips On the Issue of Money and Family

Erik Folgate — Tue, 05 Feb 2008 20:51:57 +0000

When I was in college, my first car had finally broken down. I needed another car, but I didn’t have any money to get another one. I didn’t want to go to a bank to get a loan for a car, because I was didn’t want to pay all of the interest and I didn’t want the possibility of it getting repossessed if I could not make the payment. After several discussions with my dad, he agreed to pay for the car and I would pay him a set amount each month until the loan was either paid off, or he felt that I had paid enough towards it for him to give me the title. I didn’t have to pay any interest, and if I was a few days late, I wouldn’t be penalized. It seemed like a sweet deal at the time, but once I started driving that car and paying payments to my dad, it just didn’t seem right. He wasn’t a jerk about it, and he didn’t hold it over my head, but I didn’t like the idea of owing my dad money. I thought to myself, “My family shouldn’t feel like my bank.” At some point in your life, your money and your family will mix together. You may not want it to, but it will. However, you can choose how you deal with money when it comes to you and your immediate and extended family. Borrowing money, lending money, and starting business from family can be very alluring, because you are close to that person and you feel like you can trust them. I understand why families borrow money from each and start businesses together, but I am going to give you a few reasons why you should not do it and how to avoid it.

Don’t Borrow Money From Your Family. I have adopted a rule to never borrow money from my family. Granted, I know there may be dire situations when you are going to lose your house, have a medical emergency, or some other tragedy occurs where borrowing from your family might seem like the only option. If they are your last resort and the situation is life or death, then borrow from your family. But generally speaking, I don’t think it’s a good idea to use your family as your bank. You shouldn’t have to sit at the Thanksgiving table wondering if your parents, brother, sister, uncle, or grandparent is wondering when you are going to pay them back. It’s a horrible feeling. The best way to enjoy your family is by keeping your borrowing habits to yourself. Lord knows that most families have enough issues and money would just complicate them even more.
Don’t Lend Money To Your Family. This is the same concept as above. If you’re not going to borrow it from your family, you shouldn’t lend it to your family, either! Dave Ramsey likes to quote a famous proverb in the Bible that says “the borrower is slave to the lender”, and it is so true. Do you really want your family member to feel like they are a slave to you? Well, I know some of you wouldn’t mind your in-laws feeling that way, but you know what I’m saying.
Give Money To Your Family. I’m not a cold-hearted person, so if your brother, parent, or other family member really needs some financial help to get out of a bad situation, my suggestion would be to just give them the money, no strings attached. You’ll show them a lot more love by just giving it to them rather than “loaning” them the money. Watch out for enabling that family member, though. If you know the family member habitually gets into bad situations, makes bad situations, or has an addiction, don’t keep shelling out money to them. The worst thing that you can do for a family member is continue to enable their bad habits and decisions. But, if your sister just went through a divorce and she needs help with her rent/mortgage payment just one time, go ahead and give her the money rather than loaning it to her.
Give Financial Advice With a Loving Approach. You may have a family member that is completely screwing up their finances, and you don’t want them to keep falling into the same financial traps. If it’s your parents, they may never listen to you about money, because they don’t want to hear advice or criticism from their children that they raised. If it’s your sibling, cousin, or any other family member, the best way to approach them is with a loving and empathetic attitude. If you attack them and tell them how much they’re screwing up, you’ll never get anywhere with them. They’ll shut down, and you won’t get anywhere. Start the conversation by telling them a story about how you were not on the right path with money but how you turned it around. Show them that you were in their shoes a few years back. If you take this approach and show them that you genuinely care, rather than come down on them, they’ll be more susceptible to your advice.

Family and money just don’t mix. If you mix them, you’ll have quite a sticky situation on your hands. Consider these four tips when it comes to money and family. If you’re on the right track with your finances, you can be a light to your family members who are running their finances into the ground, but lead by example first. They will appreciate you much more for it, rather than spouting off at them at every family reunion. Related Posts:

Four Tips On the Issue of Money and Family is a post from: Money Crashers

Marriage and Money: What to Do When You and Your Spouse Have Different Risk Tolerances

Erik Folgate — Thu, 15 Nov 2007 03:59:19 +0000

My wife and I are a perfect example of spouses with VERY different tolerances for risk. I am definitely more of a risk taker when it comes to investing money and Lindzee is definitely more conservative when it comes to money. I like the idea of flipping a house to make a quick profit, while she would rather put her money in a money-market account. However, Lindzee does not try to act like she knows more about investing and what levels of risk to take with our money. In most cases, we balance each other out. She helps prevent me from doing deals that will bankrupt us, while I help prevent her from allowing our money to rot from inflation and taxes. But, some of you might be in a situation where your spouse is stubborn about how to invest your money. Particularly, you might both have 401(k) or Roth IRA accounts for retirement. Just because the account is “your” account that takes money from “your” paycheck, it’s still both of your money. Which means that you should both be making decisions about that money together.

Get on the same page with your investment strategy. Obviously, this requires communication. Identify your risk tolerances. You can do this by evaluating who likes to take more risks everyday activities. One of you will be more calculated when it comes to making decisions than the other. Figure that out, and then talk about how you are going to come together to make a decision about your investments. You can’t have one of you investing in growth stock mutual funds and real estate and the other investing in government bonds. It just doesn’t make sense. Besides, it’s OUR money, not yours and mine.

Pick your retirement account investments together. If you are under 40 years old, there is no reason why you should not be aggressively investing your money. You have 25 to 35 years for that money to ride out the waves of the economy and stock market. Stop listening to the media and your weird uncle that the stock market is a bad investment. All you need to do is look at its track record which has returned 12% for the past 80 years. Again, if you are both similar in age, you should BOTH be aggressively investing. It makes no sense for one of you to have growth stock mutual funds and the other to have money market accounts.

If your partner will not take your advice about their investments, seek marital counseling. Don’t walk into the marriage counselor’s office saying you have a disagreement about 401(k) contributions, but that’s not the problem. If you can’t sit down together and have a rational conversation about how you both should be investing your retirement accounts, then there must be another issue. Maybe there are communication barriers, trust issues, or something else that is hindering your spouse from getting on the same page as you. Marital counseling doesn’t mean that your marriage is failing, it just means your human, and you need some help.

I’m going to continue to preach the idea of making decisions and managing your money TOGETHER as one cohesive unit, because that is the way I think marriage was intended to be. It was intended for you to be a team, for two people to become one person. If you can’t share your money together, you can’t share your life together. Related Posts:

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Marriage and Money: Taking Leadership Of Your Money

Erik Folgate — Sat, 03 Nov 2007 15:06:09 +0000

If you’ve read any of my other articles about marriage and money, then you know I am a huge proponent for spouses working as a team when managing money. However, I also recognize that spouses tend to have different personalities, different passions, and different things that motivate them.

One of the big questions when it comes to personal finance and relationships is: “How do I get my spouse on board to becoming debt free or saving more of our income?”

If both of you share the same principles and goals for your money from the start of your marriage, then feel blessed by that! Not everyone enters a marriage with the same ideas or goals about money and how to handle it. If you want to get your spouse on the same page as you, you must take the role of the leader when it comes to money management. But, you can’t treat it like a dictatorship. If you treat it like a dictator, your spouse will either shut down or lash back at you. No one wants to be told what to do with no rationalization behind the argument. If you take the role of a servant leader, your spouse will appreciate you more for your efforts, and the results will be more favorable.

Servant Leadership. Servant leadership is the idea of leading by example through servanthood. Serve your partner by explaining to them why you want to be debt free and invest more money for your future. Explain to them why you don’t want to buy a car on credit or use credit cards. Be patient with them. People don’t change their way of thinking overnight. They may have grown up in a household that was perpetually using debt as a tool and never saving money for the future. The key is putting your spouse ahead of yourself when it comes to leading them into better money management habits and practices.

Is there a defined leader in your household? What does that leadership look like? If no one is taking the lead for managing your money, step up and take on the challenge. If you lead with the heart of a servant, you’ll find that you and your spouse will start to share the same financial goals. Related Posts:

Marriage and Money: Taking Leadership Of Your Money is a post from: Money Crashers

Is it Worth it for Your Spouse To Go Back To Work?

Erik Folgate — Sun, 14 Oct 2007 03:25:05 +0000

Whether it’s the man or the woman that stays home with the kids during their early months or years, it’s always a good practice to see whether or not it is worth it for that spouse to go back to work after having kids.

This article from Free Money Finance reveals a comment of one of his readers that shows how they ran the numbers, and it really wasn’t worth it for the spouse to go back to work.

Things to Consider:

Will you have to pay child care if both parents are at work? If the grandparents or other family members are willing to watch them during the day, it may be worth it to go back to work. If not, child day care is VERY expensive.
How much will you make? If your spouse left a high-paying career, then it probably is worth it for them to go back to work, but if they are just looking for extra work with hourly pay, then you need to closely consider the opportunity and economic costs of getting a job.
Do you want your kids in day care every day? Sometimes it’s hard knowing that you both see your kids for only a few hours during the day. Evaluate how you will take advantage of that limited time during the week if you are both working.

My wife and I will probably both end up working while we raise our kids, but that is because we’ll both be pursuing careers that we love. Just like I said “don’t buy a house just to buy a house”. Well, don’t go to work, just to go to work! Make sure that your brining in enough income after factoring in the cost of day care, gas, and less home cooked meals. Related Posts:

Is it Worth it for Your Spouse To Go Back To Work? is a post from: Money Crashers

Marriage and Money: Spend 30 Minutes Each Week Discussing Your Finances

Erik Folgate — Sat, 22 Sep 2007 00:48:48 +0000

We live in a fast-paced society. Our time is precious to us, even though we spend hours every week wasting it by watching television, daydreaming, and doing other meaningless tasks to kill time. But when it comes down to it, it never seems like there are enough hours in the day to get what needs to be done. I know that when my wife and I don’t sit down and go over our monthly budget at least 2 times a month, we end up spending more money as a result of it, because we’re not on the same page and we haven’t set forth a clear plan for our money.

I want to encourage you to spend 30 minutes a week to dedicate to sitting down with your spouse to talk about your money. You can discuss your monthly budget, talk about out-of-the-ordinary expenses due in the upcoming months, investments, or any other issues that are pertinent to your money. You’ll feel a better sense of control over your money, and you’ll have a better sense of security that you and your spouse are on the same page with your money. You won’t have to sneak around spending money or wonder what your spouse is spending the money on. Spending 30 minutes a week talking about your finances will reduce stress in your life and reduce the amount of disagreements and fights that occur when sharing a bank account.

Pick a dedicated time during the week. It might be after dinner every monday night or sunday afternoon, whatever suits you best. Make sure you come into the conversation somewhat prepared. You may end up talking about other stuff if you don’t have any questions or concerns about your money.

This is just a small tip to help strengthen your marriage and help you become wealthy as a couple. Have a great weekend. Related Posts:

Marriage and Money: Spend 30 Minutes Each Week Discussing Your Finances is a post from: Money Crashers