Provided by Avi Ashkenazy
Most of us start the New Year with good intentions. We resolve to exercise more, eat better, get out of debt, learn something new, or help other people. But within the weeks that follow, there is a good chance that we will have abandoned our resolutions. On the other hand, some of us have given up making these ambitious lists in the first place because we are not convinced we will make the commitment a priority.
Does this lack of commitment mean that we don’t have the best intentions? On the contrary—failure to meet a goal sometimes results from poor planning. With the right plan of action in place though, almost anything can be accomplished. Good planning means obtaining the right information, setting realistic, incremental goals, and surrounding yourself with the proper support.
This year, consider resolving to gain control of your family’s finances. And don’t do it alone! Involve the entire family so you can all work as a team. Instead of making vague, general resolutions like “save money,” set manageable, achievable goals like “Save $25 per month by drinking filtered tap water instead of bottled water.” Decide on these goals only after assessing your current financial situation and brainstorming your ideas as a group.
Try not to worry that your kids will balk at the idea. Children love group activities, and from toddlerhood to teen years they are fascinated by money. Finances may be a huge source of stress for parents, but for most kids, the subject of money evokes not fear and dread, but intense curiosity.
A recent survey conducted by Forbes Consulting Group for MassMutual shows that most parents want their children to be financially savvy, but at the same time, less than half feel they are good money managers themselves. How many parents, then, are actually teaching their kids about saving, spending, and budgeting? There’s a big gap between what parents say they want and what they are actually taking steps to achieve. Now, at the beginning of the new year, is the perfect time to make family finances a priority. Make it a team effort, with everyone learning and contributing in the process.
Begin by talking with your children about resolutions. Ask them to give examples of resolutions, and make sure they understand the concept of setting goals for things they want to achieve in the future. Discuss your personal financial goals, and brainstorm ideas for each family member and for the family as a group. Discuss the ways people get and spend money, such as in exchange for services, labor, or material goods, as an allowance or gift, or as interest when money is loaned up front. Explain that the money any family receives is limited, and that spending it for one item or service means not having it for something else. Encourage each family member to make one personal resolution for the coming year and make it a priority to hold each other accountable.
Almost any decision will have a financial component, so coming up with money-related resolutions should not be difficult. Say, for example, that your son wants to learn to play the drums. Does he have his own money to contribute from an allowance, gifts, or a job? Who will teach him, and where will he obtain the instrument? He could purchase a drum set and pay for lessons, but prices would vary widely depending on the source and quality. A used kit would probably be less expensive, but as a novice drummer would he be able to choose wisely? Might a rental be available? Could he take lessons and have use of a drum set through his school at no charge? Perhaps the family could purchase a practice drum block and ten lessons to start. If at the end of that time he is still showing interest, a starter set could be bought.
Or let’s say your daughter wants to save $100 by the end of the year. If she puts aside 50 cents a week from an allowance, she’ll be a quarter of the way to her goal. Does she ever receive cash for birthday or holiday gifts? If so, help her estimate how much she could plan to set aside. Could she earn part of the money by offering a service to friends, neighbors, or family members? Consider matching funds for some or all of her deposits, to introduce the concept and to encourage her to save.
Write up your resolutions neatly and post them where everyone can see them, on the refrigerator perhaps. On a regular basis, at the beginning of each month for example, do a quick check of everyone’s progress. With determination and cooperation, you’ll be toasting your success on the following New Year’s Eve!
Today is a great day to start to gain control and begin preparing for the future. Guidance from qualified financial professionals can help overcome hesitancy and bring balance to the most challenging of financial circumstances. Working with a financial professional who understands your family’s unique, specific financial needs can help you establish key financial goals and make financial decisions a priority this year. To learn more or access helpful materials, speak with a local financial professional or visit www.massmutual.com/families.
© Massachusetts Mutual Life Insurance Company
Avi Ashkenazy is a financial representative with Lee, Nolan & Koroghlian, LLC, a MassMutual Agency. He can be reached by telephone at 646-867-8311 or 917-767-9053 (mobile), or by e-mail: firstname.lastname@example.org.