How to manage money as a family and reach financial freedom?

In many families talking about money is frowned upon. But if you want to reach financial freedom talking about money is essential! If you are single, you can just follow your own road to financial freedom with no need to consider a lot of variables. But once you have a spouse and kids things become a lot more complicated!

Talking about money with family needs to be as common as talking about the weather or your next vacation. Once you lift the money taboo you can make big steps to reach financial freedom! I will share some things we applied in our family of 4.

1. Talk about money

It all starts with talking about money. My parents never talked about money much. I only knew we weren’t rich but also not poor. A typical middle-class family.

Because I was very interested in finance from a young age, I always looked for ways to make money. As a result of that, the stock market intrigued me as well. But I never dipped my toe in the stock market as I didn’t have parents who could share their investing experiences with me. Their view was that investing has a lot of similarities with gambling. That held me back at the time.

While studying to become a CPA I learned to understand financial statements and business. That sparked my interest in investing even more. So I invested about €1,000 in the stock market to learn the ropes at age 22. About 8 years later than I wanted to.

My upbringing has showed me that lack of financial knowledge results in lower financial success. I had a wonderful youth but my parents were always struggling to make ends meet. I don’t think it was an income problem but a budgeting problem. That’s not what I want for my family and kids.

If you want to reach financial freedom, you need to talk about it with your spouse. It’s no problem to talk a few minutes about finances during dinner if you want to. Your kids can casually join in on the conversation and ask the questions they might have.

2. Talking should lead to setting goals

But only talking about money is not enough. You need to set goals. If you don’t set goals you don’t feel you are working towards something. Especially if you want to live a bit more frugal, you need to know why you are delaying instant gratification for something better in the future.

Write those goals down so you can look at them if you feel like giving up. It will not be easy.

Financial freedom is a family matter, not an individual matter. You cannot achieve that goal by yourself. You need to find a financial balance between the way you and your family wants to live and the goals you have. You are in this together.

3. Track your income and expenses

You want to make financial decisions based on facts. That’s exactly why I monitor my income and expenses through my monthly Financial Freedom Progress Report (FFPR). The FFPR is an easy tool to track my income and expenses and see if I’m still on track to reach my goals.

I use an Excel file in which I include all my income and expenses and calculate my savings rate, balance sheet and net worth. It’s much easier than it sounds.

I advise you do the same. You need to know what goes into your pocket and what goes out. Some people think they are living frugally but once you hear that they eat lunch at work every day for €8 and go out and spend €100 every weekend, I don’t think that’s true. But again, it’s a choice!

If you feel no regret in delaying financial freedom with several years because you don’t want to live that frugally, no problem!

It’s all about balance and consistency. It makes little sense to live like a monk for 1 month and afterwards live like a king for 3 months.

Blog # How to manage money as a family and reach financial freedom - mickey mouse

4. Help your kids become financially literate

Last but not least, help your kids understand basic financial concepts. Teach them about the value of money, saving and investing.

If you can help your kids to save and invest, you will teach them something they will never learn at school. Teach them about business and entrepreneurship. Those skills are imperative for the new economy and will help them become financially independent.

My kids are still very young (4 and 2), but the oldest I give a weekly allowance of €0.20. It’s not so much about the value but about the principle. She receives it happily and puts it in her piggy bank.

After a few weeks I told her what she could buy with those few coins. This helped her to get an idea about the value of these coins.

When my kids reach the age of 7 or 8, I will talk to them about stocks and let them buy their first stock of a company that sells a product they like. Probably a company like Disney.

I want to teach them to be prudent and smart with money but not act like Uncle Scrooge McDuck. I would like for them to have a generous heart when it comes to money. I want them to succeed financially so they can be instrumental in helping others who are less fortunate.

After all, it’s not about how much money you have but what you do with it to help others. That’s what I want to teach my kids.

To my readers, do you talk about money in your family? How do you teach your kids about money? Any tips you want to share?
Related articles:

The first €100,000 is a bitch, but I’ve gotta do it!

How to prepare for the next recession and make money in the process!

Stocks are much more awesome than stuff (and debt)!

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