Conversations for the family

Feel free to reach out to PSG Wealth Manager  Lizna De Villiers  directly.

Today I’m thankful for parents who taught me the value of money in such a practical way, and that how you spend it does matter. Nevertheless, finances are not a topic of discussion in all households, and we seldom see families having a joint discussion on financial decisions.

In this newsletter, I would like to share a few thoughts for discussion at the next family meeting. At a time when ‘instant gratification’ has become the norm, it is more important than ever to teach our children the value of planning, saving and patience from an early age.

Budgets

The aim of the budget conversation is for the family to gain an understanding of how the household’s money is spent and to help children nurture healthy financial habits from an early age.

For example, have a family discussion of the household grocery budget and how you managed to stick to the budget in the previous month. Also check what may be different this month. When planning a holiday, involve the kids in planning the activities and the associated costs.

The earlier children realise the difference between essential expenses and luxuries, the better.

Prioritising expenses

Engage the family in this conversation to determine and understand the biggest expenses pending, identifying which expenses are urgent or inevitable, and which financial obligations may be postponed.

Talk about what lies ahead in the next few months – for example sports tours, holidays, big-ticket household purchases or home maintenance costs. Determine the biggest priority and how to make provision for this. This gives children a realistic idea of financial planning and the associated challenges.

Savings and investment plans

As a family, how can we achieve our savings goals, and what are our long-term financial strategies?

Set a goal for the family – saving for a specific excursion or purchase. Discuss the difference between saving for something specific, and investing for capital growth – for many young people this is an unfamiliar concept, but the sooner they realise the importance of planning beyond the next month or two, the better. If possible, make investments for your children and when you feel they are ready, engage them in review sessions and the planning processes.

Debt and financial responsibility

Understand the long-term impact of debt on your life – most of us will have to incur debt when we buy a car and a home, but plan together to find the most effective way to manage the debt. Know the interest rates you are currently paying, which debt costs you the most, and what the best strategies are to pay off this debt as soon as possible.

It is also important for children and young people to understand debt. These conversations may prove quite beneficial for young adults starting their first job and acquiring their first clothing account or credit card.

Charity

In most families there are diverse opinions and ideas on whether and how they want to spend their money to help others. Apart from donating money, as a family you can donate your time to make a positive impact in your community.

This is a great way to teach kids about empathy and the value of giving.

Frank discussions of money matters lay the foundation for responsible behaviour and help our children develop the skills they need to be successful. As a family, let’s spend time on building the family’s financial future. It’s an investment that will always pay dividends – not only in terms of our wallets, but also the values our children will cherish for the rest of their lives.