In the modern household both the man and the woman bring in the money, but the man makes the money decisions, some complained. Here is a list to consider, for both, even if it somewhat leans on the man, given the general tendency in many households.
When we spoke about talking to the family about personal finance, a few reader mails came up asking how to make those conversations and implement good financial habits. It is tough to talk about money and to keep others engaged in the topic, they said. In the modern household both the man and the woman bring in the money, but the man makes the money decisions, some complained. Here is a list to consider, for both, even if it somewhat leans on the man, given the general tendency in many households. Let’s keep the conversation going.
First, avoid taking a tone of disapproval when a financial decision is being made. When the spouse is fondly looking at a top end version of the car at the showroom, and you interject to say that it is too expensive, heartburn is guaranteed. The same applies for jewellery, cell phone, choice of marble for the kitchen top and such things that adults desire. Only kids can be shut off with a firm no. Adults sulk, and more importantly carry that resentment into the future. Don’t read the scripture when the act is already unfolding.
Second, discuss the large financial decisions in a private and more relaxed setting. Not being impulsive about large financial expenses is a culture you need to foster in your household. These days the amount of online information is substantial. Formalise the large decision. Make charts and tables. Or plot the points on a board you will hang at home. Allow family members to add features, make comparisons. Let that discussion go on for sometime, a little each day, before you decide as a family.
Third, learn to let go of what doesn’t matter or pinch your purse. When the wife brings up a garment in the store, turning the label to see the price is an avoidable act. If she says that she likes two garments and can’t make a choice, let her buy both. Immeasurable joy ensues. If this kind of purchase is a large ticket in your books, go back to item number two on the list. Over time, develop for yourself and for the family, a list of items that you can indulge impulsively and a list that needs deliberation. Align these lists to your income and spends.
Fourth, make the macro decision with deliberation and get the family’s buy in. Set the rules ahead. Avoid quibbling over micro decisions. Choosing to eat at a 5-star restaurant for the birthday is a macro decision. Make it with care. Looking at the right hand side of the menu and making excuses that you aren’t very hungry, are micro quibbles. Avoid them. If the bill is out of your budget, choose the restaurant wisely. Worse, don’t order yourself liquor at ridiculous prices and lecture the family about responsibly ordering food.
Fifth, recognise expenses that will go out of hand. Buffer them. Twice the money and half the clothes is the rule for holidays, says the book! Let the family know the buffer. Discuss about the choices formally and informally. After flying out to a foreign destination paying thousands of dollars for the flight, don’t cringe about entrance tickets to star attractions and tips at the restaurant. Sharpen your budgeting skills and get everyone to participate in making the itinerary. Furnishing a new house, or celebrating an event are similar expenses that run out of hand easily.
Sixth, discuss financial goals instead of interjecting every time a spending decision occurs with a tone of warning. If you are saving for the child, and if there is an SIP that is working for that goal, talk about how a lump sum goes out of the income each month. Discuss how that SIP needs to move up when costs rise. Discuss retirement plans and corpus building. Instead of making it a generalised discussion and throwing threats and creating fear, make it the family’s goal by talking about how to estimate, fund and monitor the financial goals.
Seventh, identify the talking moments and plan for meaningful conversations. In these days of personalised entertainment it is tough to get the family to take off the ear phone and hear a conversation. Snatch some moments on a long drive, a picnic lunch, end of a long trek, a quiet rainy evening when power goes off, to curate a brief conversation. Keep it short, but cover something important. If you plan to quit your job and begin a business for example, talk to your family first.
Eighth, create accountability in the household. At the end of a year, or at a time that works for everyone, create a ritual of reviewing the family’s finances— like the reading of a will and the excitement around it. You don’t have to disclose your net worth if that information is unlikely to be kept discreet by young kids. But you can list what worked and what did not. We ran up a credit card bill because we shopped too much on the holiday; we stopped the SIP as we upgraded to a new car and paid a higher EMI; we will trek this year and have a camping holiday to save on flight tickets; and so on. Prepare well and inculcate a culture of openness.
Ninth, don’t allow tantrums, threats, emotional blackmails, and such negative strategies to drive your household’s financial decisions. If these are your qualities, lean on the spouse, a family elder or friend, to address this problem. Being angry and upset because one can’t spend as one fancies, each and every time, is an act of entitlement that needs attention. A culture of joint decision making will bring in diversity and smoothen these edges. Allow the one with patience and even temper to lead these conversations.
Tenth, don’t choose authority and autocracy as your tools in financial decision making for the household. You may be bringing in the money; you may be the big boss at work; but at home you are only first among equals. Everyone including your elderly dad that offers solace to your little kid’s disappointment, is playing a role in the household. Respect that interdependence and be willing to hear every voice for its desires, disappointments and prod the household towards financial discipline, ensuring that you also fall in line. Nothing appeals like equity and fairness.
(The author is is Chairperson, Centre for Investment Education and Learning)