FirstAvoid taking a disapproval tone when a financial decision is being taken. When the spouse is lovingly looking at the top version of the car in the showroom, and you intervene, saying that it is too expensive, heartburn is guaranteed. The same applies to jewellery, cell phones, marble picks for kitchen tops, and the likes of adults. Only children with firm numbers can be locked. Adults get angry, and more importantly, carry that resentment into the future. Do not read scripture when the task is already in front of you.
SecondDiscuss major financial decisions in a private, more relaxed setting. Not being impulsive about big financial expenses is a culture you need to foster in your home. There is ample amount of information online these days. Formalize the big decision. Create charts and tables. Or plot those points on a board that you will hang over the house. Allow family members to add features, compare. Before you decide as a family, let that discussion go on for a while, a little bit each day.
third, learn to discard what doesn’t matter or pinch your purse. When the wife brings a garment to the shop, it is an avoidable act to change the label to see the price. If she says she likes two clothes and can’t choose, let her buy both. Incredible joy ensues. If this type of purchase is a big ticket to your books, go back to item number two on the list. Over time, for yourself and the family, develop a list of items you can impulsively include and a list that needs deliberation. Align these lists with your income and expenses.
fourthMake macro decisions with deliberation and go family shopping. Set further rules. Avoid arguing over subtle decisions. Choosing to eat at a 5-star restaurant for a birthday is a big decision. Make it carefully. Looking at the right hand side of the menu and pretending you’re not very hungry are subtle quibbles. Avoid them. If the bill is out of your budget, choose the restaurant wisely. Worse, don’t find yourself ordering wine at ridiculous prices and telling family about ordering food responsibly.
fifth, recognize the expenses that will get out of hand. Buffer them. Double the money and half the clothes are the rule of the holidays, says the book! Tell the family the buffer. Discuss options formally and informally. After paying thousands of dollars for a flight to an exotic destination, don’t worry about entry tickets to star attractions and tips at restaurants. Sharpen your budgeting skills and ask everyone to participate in creating the itinerary. Decorating a new home, or celebrating an event are expenses that easily get out of hand.
sixth, financial discussion aim Instead of interfering with spending decisions each time with a cautionary tone. If you’re saving for a child, and if there’s a SIP that’s working toward that goal, talk about how the lump sum goes each month. Discuss how that SIP should be increased as the cost increases. Discuss retirement plans and fund building. Make it a family goal by talking about how to estimate, fund, and monitor financial goals, rather than making it a generalized discussion and throwing threats and instilling fear.
seventhIdentify talking moments and plan meaningful conversations. In these days of personal entertainment, it is difficult for the family to take off the earphones and listen to the conversation. A few moments on a long drive, a picnic lunch, the end of a long trek, a quiet rainy evening when the power is turned off, snuggle up to curate a brief conversation. Keep it short, but cover something important. If you are planning to quit your job and start a business for example, talk to your family first.
eighthCreate accountability at home. At the end of a year, or at a time that works for everyone, make it a ritual to review the family’s finances—such as reading a will and the excitement surrounding it. You are not required to disclose your net worth if that information is unlikely to be kept secret by young children. But you can list what worked and what didn’t. We ran up a credit card bill because we made too many purchases on the holiday; We stopped the SIP as soon 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 develop a culture of openness.
ninthDon’t allow tantrums, threats, emotional blackmail and such negative strategies to drive your household financial decisions. If these are your qualities, then to solve this problem, take the help of your spouse, family elder or friend. Being angry and upset because every time cannot be afforded as a fantasy is an act of entitlement that needs attention. A culture of joint decision making will diversify and facilitate these edges. Let the person lead these conversations with patience and restraint.
tenthDon’t choose authority and autocracy as your tools in making financial decisions for the household. Maybe you’re bringing in money; You can be the big boss at work; But in the house you are only the first among equals. Everyone who consoles your young child’s despair, including your elderly father, is playing a role in the household. Respect that interdependence and be prepared to listen to every voice for her wishes, frustrations, and instilling financial discipline in the family, making sure you fall in line too. Nothing is as attractive as equality and fairness.
(The author is chairperson of the Center for Investment education and learning)