As promised, here’s the next instalment in my guide to achieving Financial Health. If you haven’t done so already, I highly recommend reading Improving Your Financial Health – Step 1 before you continue with this article.
Improving Your Financial Health – Step 2
In “Step 1” mentioned a number of phrases that encapsulate what “Financial Health” or “Freedom” meant to me, I have included them below.
Full awareness – (of my Financial Position)
The ability to be open and honest – (with my family)
To have choice – (where we spend our money)
Ability to handle “surprises”
Guilt Free Spending
In this post, we are looking at the 2nd phrase, The ability to be open and honest – (with my family).
Open & Honest
Just to be clear, I’m not talking about suddenly going from keeping a closed book on your finances to proudly standing on top of a podium in your busiest mall, announcing to the world your latest financial health check report. That’s a little too open, even for me. That said, I gave the subtext in the phrase “The ability to be open and honest” as “with my family“, which is true for me, but there is more to it than that.
We’ve already covered being honest with yourself , in the first article (link is at the top of this post), I talked about finding out the reality of your current financial health, as we covered, it’s not an easy step.
Who to be honest with ?
I think the simplest answer is ideally anyone who has influence over the spending of, or allocating of a budget category. For example, in the “full awareness” step, if you are jointly responsible for the household budget (ie, flatmate, spouse or significant over) then it’s pretty much everything. I wholeheartedly advocate a completely open financial book for you and your significant other.
If you share any kind of dwelling, and some of the bills/budget with your cohabitants, then it’s openness about all of those specific areas which you share or take joint responsibility for.
Kids is a little trickier, you need to choose the right time to introduce financial planning help, but once you do, again, learn to open up with them about any budget areas they can have an influence in. Also to understand the full picture of your financial position, it can help them understand what they can do to help or get involved.
For example, when we brought together our families, we sat down with all of our teenage children in one of our family meetings (another useful topic in a parenting section we may start to include), we discussed ways in which as a family we can reduce our spend. We were honest about our financial health situation and what issues we faced, from our perspective. Then asked the kids what their perspective was, what issues they saw, and what goals they wanted.
We looked at categories such as Groceries, TV/Internet/Phone, Cell Phones, Electric/Water etc, anything that we all had use of or influence over. We made decisions as a family, that EVERYONE could understand and get behind. We reduced our cable TV monthly costs, monthly grocery budget, increased awareness regarding electricity usage (which had both a financial and importantly environmental impact). Actually resulted in over $400 per month saving on our monthly outgoings.
Whats so important here, is that the conversations around these topics, were not only carried out with openness and honesty, they were also inclusive.
The bottom line
Being open to a financial analysis can reduce your financial stress. The old adage, A problem shared is a problem halved, rings true here, but its much more than that. Being open ensures your own honesty, it enables others to understand and get on board with any changes that are required to achieve our goals. It ensures accountability, once you have shared your goals and commitments with someone else, you are much more likely to stick to it and make it happen. Essentially you are putting your positive intent out there, here’s my current situation and here’s what I want to do differently.